200+ US Companies To Move Manufacturing Base From China To India

A US-based firm with good business ties in India gave a statement recently. It said about 200 American firms plan to move their production from China to Indian soil. As per USISPF, the move will take place after the Elections.

Mukesh Aghi, the CEO and president of US-India Strategic and Partnership Forum (USISPF) told Press Trust of India, “I think that’s critical. We would advise to bring more transparency in the process and to make it more consultative because in the last 12 to 18 months, we are seeing US companies look at some of the decisions being made, either e-commerce or data localization, as more domestic-oriented than global.”

Aghi further said that they need to know well how to attract these firms. This involves various critical aspects. The main issues to face are custom issues, land issues to be part of the global supply chain. This requires a large number of reforms to create lots of job facilities. He said that they are planning to prepare the FTA document well in advance. The document will serve as a proposal once the election results are out.

To boost competition, Aghi supports a US – Indian Free Trade Agreement (FTA). Mukesh Aghi said, “I think if India is concerned about cheap goods coming from China, an FTA will eliminate that need. You can put barriers to Chinese goods and still have the US providing access to the Indian market and Indian companies having more access to the US market, and issues like GSP (Generalised System of Preferences) would diminish,”.

The US-China trade disputes caused many firms to make this move. Foxconn, a Apple supplier from Taiwan said they plan to move to India. Many other suppliers of Apple have announced a similar move. These firms plan to increase their production in India. A report on Los Angeles Times said, “they [the Trump White House] and others in Washington see Beijing as a serious threat to American interests and want to encourage U.S. firms to shift supply chains away from China, preferably to the United States or a third-party country.” Even before the trade war, many firms began relocating their bases to other nations. The main reason was high manufacturing cost, wages, rent and utility costs.

China faces high production costs and an unclear tariff war with the US. This has given a chance for other Asian nations to get FDI. Aghi hopes the next Govt. would make transparent decision process. To attract firms to invest in India, economic reforms should move fast. He said, “at the moment most of them are waiting for elections to be over. But there’s a large deluge of companies keen to not only manufacture in India but also who want to go after the domestic market.” India is currently holding an election in 7 phases. The final result of the election will be given out on May 23, 2019. The main parties are BJP and Indian National Congress. Both have said during campaigns that they will accept FDI.

Aghi highlighted that the number of investments brought by these companies is useful. In the past 4 years, USISPF firms have spent over 50 billion dollars in India.

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