November 12, 2019
The government is looking at it as a great opportunity
Govt will meet companies between Aug 26 and Sept 5 to suggest the best
investment zones for their operations. Wholesale brake
motors Apple, Wistron, Pegatron and Foxconn did not respond to a request for
comment. (Photo: AP) New Delhi: Government is targeting companies including
Apple, Foxconn and Wistron Corp with a charm offensive aimed at encouraging them
to shift business out of trade war-hit China, according to a source and a
document seen by Reuters.Several Indian officials met on August 14 and discussed
a list of "target companies†that also include Taiwan-headquartered contract
manufacturer Pegatron Corp, a source with direct knowledge said.
The dispute
between the United States and China, the world’s two largest economies, has led
to higher tariffs on goods worth billions of dollars and disrupted global supply
chains, prompting companies to look at other investment avenues to escape higher
tariffs.Amid suggestions that India is late to capitalise on the trade war,
government ministries have been asked to submit their policies and incentive
structures to Invest India, the country’s foreign investment promotion agency.
Nine sectors including electronics, autos, pharmaceuticals and telecoms will be
targeted.The document said the government will meet companies between August 26
and September 5 to suggest the best investment zones for their operations. State
governments will also participate.
A "complete package†detailing market factors
and Indian incentives on offer will then be readied for presenting to potential
investors, according to the government record of the August 14 meeting seen by
Reuters.Apple, Wistron, Pegatron and Foxconn did not respond to a request for
comment.It is not clear whether the government will dole out new incentives or
just detail existing ones, but the document shows India wants to explore
opportunities and move swiftly, even as some fear it has missed the bus.As
companies think about rebuilding supply chains outside of China, a major global
manufacturing hub, nations such as Vietnam have emerged as top destinations
given the faster clearances and stable policies they offer, industry experts
say.Alphabet Inc’s Google is shifting its Pixel smartphone production to Vietnam
from China starting this year, the Nikkei business daily reported on
Wednesday.
There is one other monster country that has a huge domestic market,
India, but they have got to get moving,†said Richard Rossow, a US-India
specialist at the Center for Strategic and International Studies in
Washington."There is no time to waste in catching that new wave and in fact the
question is: Have they already missed it?â€BENEFITING FROM TARIFFS WARThe Sino-US
trade war has also rattled global automotive supply chains and affected big
automakers.Indian officials this week separately met local delegates of
automakers including Volkswagen, Hyundai Motor Co and Honda Motor Co to see if
they would consider moving some supply chain operations from China to India,
according to the source and an industry official who attended the meeting.
The
government is looking at it as a great opportunity,†said the industry
official.Honda declined to comment, while Volkswagen and Hyundai did not respond
to Reuters’ request.The protracted trade dispute has also jolted Apple, which
faces levies of 15 per cent imposed by the US administration on major products
made in China such as smartwatches on Sept 1, with a tariff on its iPhone to
take effect on Dec 15.India is the world’s second-biggest smartphone market with
huge room for growth. But while the likes of Foxconn, which assembles Apple
phones in India, have deepened their India presence, executives say nations such
as China offer a more skilled workforce and a better organised components
ecosystem.A senior smartphone industry executive in India said future corporate
investment decisions would rely mostly on whether a country can offer policy
stability and faster clearances."Vietnam at the end of the day is a small
country and the potential of growing to super-scale, multi-tier supply chain
capability is not possible,†said the executive.
The Indian government will also
share a list of foreign companies with its consulates which will be tasked to
fix meetings with the firms at their headquarters."This exercise to start first
with Chinese companies based in China and to be completed before 15th of
September 2019, including one-on-one meetings,†the document said.
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