To offer an alternative to China, India’s local sourcing and distribution networks are being gradually expanded, and significant incentives and regulatory relaxations for foreign companies are being made available.
At the India-Japan annual summit, Japan’s Prime Minister Fumio Kishida pledged Yen 3.5 trillion ($42 billion) in Indian investments over the next five years. Suzuki Corporation has signed a memorandum of understanding to build an electric car factory in Gujarat.
India, Japan, and Australia launched the Supply Chain Resilience Initiative (SCRI) in April 2021, which aims to improve supply chain resilience in the Indo-Pacific region by developing reliable sources of supply as well as attracting new investment opportunities.
According to a February 2020 estimate by Switzerland-based financial services corporation UBS, India might become a favoured destination for businesses wishing to transfer from China and diversify their supply chain.
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There are a slew of industries in which China’s dominance can be reduced or eliminated entirely, according to India.
In addition to these industries, there are many others, such as energy, vehicles, steel, pharmaceuticals, textiles, maritime products, financial services, IT services, and tourism.
Global corporations are aiming to diversify their approach to avoid manufacturing and supply chain disruptions, and India stands to benefit from this shift that will also break the concentrated supply chain in China. India.
This programme has helped the Indian economy by allowing the country to begin manufacturing a wide range of products from electronics to solar panels to bulk pharmaceuticals to metals to furniture to toys to footwear to hardware to automotive components to tyres to bearings and machines.
In order to reduce production costs and mitigate the risks associated with doing business in China, some Indian companies have established domestic sourcing and distribution networks. As a result, the Indian government increased import levies on specific electronic components in successive budget provisions in order to create a less fragile supply chain within India itself.
In order to lessen their dependency on imports and increase their attention on large-scale indigenization, businesses in India, as well as those based abroad, have begun producing locally. Vivo, a Chinese smartphone manufacturer, has opened a factory in Greater Noida.
Similarly, Samsung, a South Korean multinational, has opened a display production facility in Noida, India, the country’s first. It is expected to play a crucial role in the upcoming global supply chain restructuring.
1,455 Japanese companies are currently working and 11 Japan Industrial Townships (JIT) have been developed in India, including Neemrana in Rajasthan and Sri City in Andhra Pradesh, which host the most Japanese manufacturing firms. As India’s largest development partner, Japan is also India’s fifth-largest FDI contributor.
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Due to China’s increasing labour costs, foreign companies are increasingly interested in setting up a supply chain in India. India’s entry-level wages are between Rs 12,000 ($157) and Rs 15,000 ($196), whereas those in China are nearly three times higher, according to industry analysts.
Global manufacturers long based in China are looking to diversify their manufacturing bases to India in light of the competitive advantage that India has in terms of land and labour availability, as well as software skills, against this backdrop, even as China’s current Covid crisis underscores the importance of moving away from reliance on a single economy. IANS
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