India is considered as a global friendly country as it believes in the philosophy of “Vasudhaiva Kutumbakam”, or world family, and this has guided the nation since Vedic times, where all the countries of the world are considered as one family.
India is one of the fasted growing countries in the world and is attracting huge FDI in the past several years. Many large companies from the developed countries have made up their manufacturing base in India to cater to not only the vast Indian market but as source for their Global supplies.
The Economy of India is the fifth largest in the world with a GDP (a year's
goods and services) of $2.30 trillion (U.S.). If one considers PPP (purchasing
power parity: how much that money can buy in India compared to other
countries), the economy is third largest (worth $8.52 trillion U.S.).
China currently as Global supplier
China so far is considered to be the Global hub for international supply chain and many countries, their economies and corporates are relying on the supplies from the China. There is a growing realization now among the countries and the multinational companies that capacities cannot be concentrated at one place and are thus have started exploring the alternatives.
Post Covid19 Global Supply Chain Emerging Scenario
The realization has become more evident post episode of COVID19 many countries like Japan and USA are encouraging their companies and are offering incentives to move out of China and relocate themselves in other countries. Japan has earmarked about $2.2 billion funds to be given as incentives to the Japanese companies willing to move out of China. The US Commerce Department, State and other agencies are looking for ways to push companies to move both sourcing and manufacturing out of China. Other countries like South Korea, Australia, Germany and many other European countries are drawing up plans to persuade their companies to move to some other locations.
India as a Substitute for Global supply Chain Base
In this backdrop India offers a unique opportunity for all such companies to make base in India to be a trusted global industrial hub. India offers a Red Carpet Welcome to the companies to set up their operations as their preferred investment destination. India has changed its policies considerably which can be measured by the fact that it has risen by 69 places, highest for growing economy, from 142 in 2014 to 63 in 2019 as per World Bank report. India is continuously working to mend its policies for ease of doing business. India is poise to become the Global nerve center of Multinational companies in post Covid19 era.
Government has undertaken some major Policy reforms to Support Manufacturing Climate in The Country by:
- Fast track Investment clearance through Empowered Group of Secretaries (EGoS)
- Project Development Cell in each Ministry to prepare investible projects, coordinate with investors and Central and Sate governments.
Investment Schemes for promotion of New Champion sectors to launched in sectors such as Solar Power, Advances Battery Storage; etc.
Some of the key strengths of the country are:
The current Union Government is running for six years now and with absolute majority helping in taking bold decisions in the best interest of the country including on economic policies
The government is focused on making the country an attractive destination for foreign companies to come and manufacture in India. Make in India Make in India
is one of such initiatives
Recently government has earmarked around 462,000 Hectares of land for the companies moving out of China of which approx. 151,000 Hectares is developed industrial land in various states.
The country is among the one of the cheapest source of skilled and unskilled labor helping the companies to reduce the wages cost.
India is one of the most vibrant countries in terms of technically skilled people, technology development and its adaptation. It is a well known fact that India is a leading force in terms of Information technology and is serving the global giants in various capacities. It is capable to offer highly skilled technical work force to any organization operating in the country
According to the United Nations Population fund, India is to have the world’s largest youth population by 2020. This will therefore drive innovation, productivity and growth.
With Corporate Income Tax rates at 15% for the new manufacturing companies to 22%- 25% for other companies, India is one of most competitive nation among the global pears providing huge incentives to have a base in India.
India is rich in natural resources like land, water sources,
fisheries, mineral resources, marine resources, forests,
rainfall, climate, and topography. In minerals India has
an abundance of mineral deposits. The country is the
second-largest producer of steel; the third-largest
producer of coal; the fourth-largest producer of iron and
has the fifth-largest bauxite reserves in the world.
Overall, India produces over ninety different types of
Infrastructure in India has witnessed a growth in spending. Over the next two decades more than USD 1.5 tn investments are planned for infrastructure. India has:
- Large coastal line for the ports
- World class International Airports in all major cities
- Vast net work of Railways and Highways throughout the length and breadth of the country
India produces 25% of all engineers in the world
every year. India is becoming known for low cost
innovation in diverse field like healthcare and
education. It is the only country other than USA
and Japan to build the Super Computer
As per the World Economic Forum Report India
is poised to become the third-largest consumer
market behind only the US and China; and
consumer spending in India is expected to grow
from USD 1.5 trillion at present to nearly USD 6
trillion by 2030,
India is the third largest startup ecosystem in
world just behind China and USA with more than
50,000 startups in 2019. Indian startup ecosystem
and has become very vibrant and mainstream in
many ways like job creation, solving problems of
the consumers, creating products and solution
provider to the world. The cumulative valuation of
the startups in India has now crossed $55 billion
with the addition of 7 new unicorns in 2019,
according to the report titled India's Tech Start-up
India has one of the oldest stock exchanges in Asia and ranks eighth in terms of “protecting minority investors” according to the World Bank.
Unlike many other emerging economies, India has a positive macroeconomic environment: inflation is under control, and it has record high foreign exchange reserves and a tamed current account deficit – thus reducing vulnerability to global economic shocks. India has vast foreign Exchange reserves of more than $481 Billion in the first week of May 2020.