There’s new hope for ‘Make in India’ as MNCs look to spread out from virus-hit China
There’s new hope for ‘Make in India’ as MNCs look to spread out from virus-hit China
The low corporate tax rates and huge domestic market work in India's favour, but investors wary of policy uncertainty.
REMYA NAIR 23 April, 2020 11:02 am IST
Employees test mobile phones on an assembly line in the mobile phone plant of Rising Stars Mobile India Pvt., a unit of Foxconn Technology Co., in Tamil Nadu | Karen Dias/Bloomberg
Representational image | Employees test mobile phones on an assembly line in the mobile phone plant of Rising Stars Mobile India Pvt., a unit of Foxconn Technology Co., in Tamil Nadu | Bloomberg
Text Size: A- A+
New Delhi: Many multinational companies (MNCs) are exploring the option of ‘making’ in India as they look to diversify and shift manufacturing ecosystem partially out of China amid a massive disruption in supply chains due to Covid-19.
According to consultants and analysts ThePrint spoke to, several MNCs are reaching out to government agencies, their own respective embassies in India and consultants as they look to conduct feasibility studies to shift some of their operations into India.
Apple’s manufacturing partner Winstron Corporation has reportedly evinced interest in moving to India. iPhone assembler Pegatron is also considering India as one of the options. South Korean firms like Posco and Hyundai Steel are also looking to set up operations in India, according to the South Korean consulate.
India has become an attractive option for these firms after a cut in corporate tax rates last year to as low as 15 per cent for new manufacturing firms. Further, the large domestic market in India and the relatively low labour costs are another advantage, the consultants and analysts said.
However, the constantly changing policies and the uncertainties are proving a source of concern and hesitation for the investors, they added.
VDO.AI
Firms are looking to reduce their geographical concentration in China and explore other markets and jurisdictions. Other than India, firms are also looking at Vietnam, Malaysia, Philippines and Indonesia as alternative options.
Also read: CII wants Modi govt to add more sectors to exempted list, remove criminal charge threat
Why the move to India
Sudhir Kapadia, national leader-tax at EY said there have been queries from many MNCs across jurisdictions like the US, Europe, South Korea and Japan who are keen to explore the Indian option.
“Most MNCs would not like to put everything under one geography given this kind of disruption. The focus while creating new supply chains and reorganising existing supply chains is de-risking and diversification,” Kapadia said.
He added that some factors give India an edge. “India now has a very attractive direct tax regime with tax rates as low as 15 per cent for new manufacturing companies. Coupled with the state level incentives, removal of the dividend distribution tax and the huge domestic market, India has become an attractive option,” Kapadia said.
Another tax consultant with one of the consulting firms, who didn’t wish to be identified, said the interest has been evinced from firms in the electronics space – white goods, smartphones and computer accessories, and the health sector including pharmaceuticals.
However, the complex tax and regulatory regime is a hurdle, he said. “There is no single window clearance for practical purposes. You have to reach out to multiple agencies to get compliances done,” he added.
Also read: How Indian factories have begun to tip-toe back to work after lockdown was lifted partially
What the government has said
Krishnamurthy Subramanian, Chief Economic Advisor in the finance ministry said last week that the Narendra Modi government had begun the process of reaching out to big firms to encourage them to shift their operations into India.
“After Covid-19, multinational enterprises will look at diversifying their global supply chains (away from China) and India will be an option,” he had said at ThePrint’s Off the Cuff.
Subramanian added that India has been in talks with the so-called nodal companies to shift their base to India. Typically, for instance, if a mobile manufacturer shifts its base to India, then the suppliers and other companies that are part of the value chain like distributors, also shift, he explained.
The process of reaching out to the firms had started prior to the pandemic in the aftermath of the US-China trade war, he added.
‘Thrust on Make in India’
Sandeep Jhunjhunwala, director, Nangia Andersen LLP said India is steadily emerging as a powerful alternative manufacturing destination for businesses planning to de-risk and diversify their supply chain operations.
“Recent production linked incentive schemes for large scale electronics manufacturing, including the modified electronics manufacturing clusters (EMC 2.0) scheme would also put an upward thrust on the ‘Make in India’ and ‘Assemble in India’ campaigns of the government,” he said.
“In addition to the policy initiatives of the central government targeting manufacturing companies exiting China, several state governments are also working towards creating windows in respective state industrial policies to woo investors,” he added.
IMF’s 1.9% growth projection for India in FY21 a reasonable estimate, says CEA Subramanian
India’s chief economic advisor says fiscal deficit only area that needs to be looked at right now, adding the stimulus package will be announced soon.
REMYA NAIR 21 April, 2020 3:35 pm IST
KV Subramanian | Suraj Singh Bisht | ThePrint
KV Subramanian | Suraj Singh Bisht | ThePrint
Text Size: A- A+
New Delhi: The Indian economy’s performance will pick up in the second half of the fiscal, and the International Monetary Fund (IMF)’s projection of a 1.9 per cent growth for India in 2020-21 may be a reasonable estimate, Chief Economic Advisor Krishnamurthy Subramanian said Monday.
In a conversation with ThePrint’s Editor-in-chief Shekhar Gupta, Subramanian said, “There will be an adverse impact on the Indian economy due to Covid-19. The IMF estimate of 1.9 per cent growth (in 2020-21) is a reasonable estimate.”
He added, “The growth in the April-June quarter will be badly hit. The next quarter will be better and economic performance should pick up in the second half of the year.”
Subramanian pointed out that consumers who have postponed their discretionary spending, like buying homes or cars, are likely to resume purchases once the situation improves.
VDO.AI
The CEA also said that the Narendra Modi government is looking at attracting foreign investors to purchase locally issued government debt to finance its fiscal deficit and the much-anticipated Covid-19 fiscal stimulus package.
A stimulus package for micro, small and medium enterprises and start-ups is likely to be announced soon, he said.
The government is considering a reduction in customs duties on intermediary products like raw materials to encourage ‘Make in India’ at a time when global companies are looking to move their production base out of China in the aftermath of the Covid-19 pandemic, said Subramanian.
The Modi government and the Reserve Bank of India (RBI) have taken a series of steps to protect the economy from the Covid-19 fallout. While the government announced a Rs 1.7-lakh crore package of cash transfers and free foodgrains last month, the RBI has sharply cut policy rates, allowed a three-month loan moratorium and provided liquidity to stressed sectors like non-banking finance companies.
The government is now working on a second stimulus package looking to protect the worst hit sectors, and an announcement is expected to be made soon.
The low corporate tax rates and huge domestic market work in India's favour, but investors wary of policy uncertainty.
REMYA NAIR 23 April, 2020 11:02 am IST
Employees test mobile phones on an assembly line in the mobile phone plant of Rising Stars Mobile India Pvt., a unit of Foxconn Technology Co., in Tamil Nadu | Karen Dias/Bloomberg
Representational image | Employees test mobile phones on an assembly line in the mobile phone plant of Rising Stars Mobile India Pvt., a unit of Foxconn Technology Co., in Tamil Nadu | Bloomberg
Text Size: A- A+
New Delhi: Many multinational companies (MNCs) are exploring the option of ‘making’ in India as they look to diversify and shift manufacturing ecosystem partially out of China amid a massive disruption in supply chains due to Covid-19.
According to consultants and analysts ThePrint spoke to, several MNCs are reaching out to government agencies, their own respective embassies in India and consultants as they look to conduct feasibility studies to shift some of their operations into India.
Apple’s manufacturing partner Winstron Corporation has reportedly evinced interest in moving to India. iPhone assembler Pegatron is also considering India as one of the options. South Korean firms like Posco and Hyundai Steel are also looking to set up operations in India, according to the South Korean consulate.
India has become an attractive option for these firms after a cut in corporate tax rates last year to as low as 15 per cent for new manufacturing firms. Further, the large domestic market in India and the relatively low labour costs are another advantage, the consultants and analysts said.
However, the constantly changing policies and the uncertainties are proving a source of concern and hesitation for the investors, they added.
VDO.AI
Firms are looking to reduce their geographical concentration in China and explore other markets and jurisdictions. Other than India, firms are also looking at Vietnam, Malaysia, Philippines and Indonesia as alternative options.
Also read: CII wants Modi govt to add more sectors to exempted list, remove criminal charge threat
Why the move to India
Sudhir Kapadia, national leader-tax at EY said there have been queries from many MNCs across jurisdictions like the US, Europe, South Korea and Japan who are keen to explore the Indian option.
“Most MNCs would not like to put everything under one geography given this kind of disruption. The focus while creating new supply chains and reorganising existing supply chains is de-risking and diversification,” Kapadia said.
He added that some factors give India an edge. “India now has a very attractive direct tax regime with tax rates as low as 15 per cent for new manufacturing companies. Coupled with the state level incentives, removal of the dividend distribution tax and the huge domestic market, India has become an attractive option,” Kapadia said.
Another tax consultant with one of the consulting firms, who didn’t wish to be identified, said the interest has been evinced from firms in the electronics space – white goods, smartphones and computer accessories, and the health sector including pharmaceuticals.
However, the complex tax and regulatory regime is a hurdle, he said. “There is no single window clearance for practical purposes. You have to reach out to multiple agencies to get compliances done,” he added.
Also read: How Indian factories have begun to tip-toe back to work after lockdown was lifted partially
What the government has said
Krishnamurthy Subramanian, Chief Economic Advisor in the finance ministry said last week that the Narendra Modi government had begun the process of reaching out to big firms to encourage them to shift their operations into India.
“After Covid-19, multinational enterprises will look at diversifying their global supply chains (away from China) and India will be an option,” he had said at ThePrint’s Off the Cuff.
Subramanian added that India has been in talks with the so-called nodal companies to shift their base to India. Typically, for instance, if a mobile manufacturer shifts its base to India, then the suppliers and other companies that are part of the value chain like distributors, also shift, he explained.
The process of reaching out to the firms had started prior to the pandemic in the aftermath of the US-China trade war, he added.
‘Thrust on Make in India’
Sandeep Jhunjhunwala, director, Nangia Andersen LLP said India is steadily emerging as a powerful alternative manufacturing destination for businesses planning to de-risk and diversify their supply chain operations.
“Recent production linked incentive schemes for large scale electronics manufacturing, including the modified electronics manufacturing clusters (EMC 2.0) scheme would also put an upward thrust on the ‘Make in India’ and ‘Assemble in India’ campaigns of the government,” he said.
“In addition to the policy initiatives of the central government targeting manufacturing companies exiting China, several state governments are also working towards creating windows in respective state industrial policies to woo investors,” he added.
IMF’s 1.9% growth projection for India in FY21 a reasonable estimate, says CEA Subramanian
India’s chief economic advisor says fiscal deficit only area that needs to be looked at right now, adding the stimulus package will be announced soon.
REMYA NAIR 21 April, 2020 3:35 pm IST
KV Subramanian | Suraj Singh Bisht | ThePrint
KV Subramanian | Suraj Singh Bisht | ThePrint
Text Size: A- A+
New Delhi: The Indian economy’s performance will pick up in the second half of the fiscal, and the International Monetary Fund (IMF)’s projection of a 1.9 per cent growth for India in 2020-21 may be a reasonable estimate, Chief Economic Advisor Krishnamurthy Subramanian said Monday.
In a conversation with ThePrint’s Editor-in-chief Shekhar Gupta, Subramanian said, “There will be an adverse impact on the Indian economy due to Covid-19. The IMF estimate of 1.9 per cent growth (in 2020-21) is a reasonable estimate.”
He added, “The growth in the April-June quarter will be badly hit. The next quarter will be better and economic performance should pick up in the second half of the year.”
Subramanian pointed out that consumers who have postponed their discretionary spending, like buying homes or cars, are likely to resume purchases once the situation improves.
VDO.AI
The CEA also said that the Narendra Modi government is looking at attracting foreign investors to purchase locally issued government debt to finance its fiscal deficit and the much-anticipated Covid-19 fiscal stimulus package.
A stimulus package for micro, small and medium enterprises and start-ups is likely to be announced soon, he said.
The government is considering a reduction in customs duties on intermediary products like raw materials to encourage ‘Make in India’ at a time when global companies are looking to move their production base out of China in the aftermath of the Covid-19 pandemic, said Subramanian.
The Modi government and the Reserve Bank of India (RBI) have taken a series of steps to protect the economy from the Covid-19 fallout. While the government announced a Rs 1.7-lakh crore package of cash transfers and free foodgrains last month, the RBI has sharply cut policy rates, allowed a three-month loan moratorium and provided liquidity to stressed sectors like non-banking finance companies.
The government is now working on a second stimulus package looking to protect the worst hit sectors, and an announcement is expected to be made soon.
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