Companies Are Shifting From China To India | Companies Moving To India

Companies in China shifting to India, what is the reason behind choosing India for manufacturing is this an opportunity for India to become the next big manufacturing giant. China claims that they have stopped the spread of Covid-19 the intense lockdown Chinese manufacturing sector has started to reopen but after this pandemic, China's manufacturing sector will not be the same as it was before in the recent Covid-19 pandemic companies got to know that they cannot depend on one supplier for their products also governments across the globe are encouraging their companies to move out of China to know more about why companies are moving out of China.

Companies are looking for an alternative for China and they are considering countries like India, Vietnam, Malaysia, Indonesia, and Mexico the investors always thought a Vietnam is the best for manufacturing due to its low labor costs but there is a country which has been driving a lot of attention lately and that is India has a bunch of reasons why investors could be looking forward to it for manufacturing:

1^st Reason: - Low labor cost is one of the major reason behind companies moving in India the average monthly wage for Chinese labor is between 140 dollars to 340 dollars and in India, it is as low as 70 dollars to 200 dollars so it is significantly cheaper to manufacture any products in India compared to China.

2^nd Reason: - Low taxes last year in 29 the corporate tax in India was cut down from 30 percent to 22 percent and for new manufacturers, it is 15 percent from 25 percent back then this is the lowest corporate tax in the South Asia region right now also an implementation of GST and tax collection makes easier for companies to pay their taxes all these reforms attract more investors in India.

3^rd Reason: - The huge market in India has the second-largest population in the world even if you sell your products to 5 percent of people in this country. The entire population will be more than most of the countries also if companies are manufacturing their products outside India and have to pay extra for export taxes and transportation.

4^th Reason: - India is a democratic country most of the Western companies can easily adapt themselves for Indian markets law and order government agencies in a culture of India unlike China and India companies have fair competition in markets and they can easily sure anyone including government so companies feel more secured in India than China.

5^th Reason: - India's growth in the past years India has roughly the same population as China also India is the fifth-largest economy in the world and India has lifted more than 300 million people out of poverty in the last 18 years unlike China. India's growth did not come with the rise of the manufacturing industry but it came with its service-based industry like IT banking and retail sectors but from the last couple of years, the manufacturing sector of India has grown significantly according to some sources, India's manufacturing sector is increasing 8 percent per year.

There are many reasons why India can be the next manufacturing hub but along with that India has some problems:

1^st Problem: - India is working on its infrastructure it is not good as China or even Vietnam companies in China were established decades ago also they have good access to the global supply chain in China.

2^nd Problem: - Ease of doing business if companies want to open manufacturing in India. They have to go through 12 procedures and this requires nearly 27 days also the corruption in India has been a major concern for multinational companies for a long time.

3^rd Problem: - Indian Currency in rupees is very volatile because offer e-floating currency but countries like Vietnam have more stable currency because of crawling peg system that means a value of $1 in Vietnam does not change suddenly and this is beneficial for companies.

4^th Problem: - Political issues building an exclusive economic zone or a manufacturing plant requires a lot of lands and during acquisition, many opposition's can be made an issue.

Last a couple of year’s government is taking action to solve these problems. India is changing policies to attract companies and boost the economy and Make in India initiative has also attracted many foreign investors. India is also planning to make a dynamic push to the Make in India initiative after the lockdowns yet Indian government is ready to give complete support for companies that are planning to move in India so this can be an opportunity for India to become the next big manufacturing hub.

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