Sino-US trade war: India to persuade foreign companies including Apple, Foxconn, Wistron and Pegatron to invest.
India has taken rhetorical steps to woo foreign investment and gain benefits out of Sino-US trade war. It aims to persuade big names including Apple, Foxconn, Wistron and Pegatron Corp.
Different government ministries have been asked to submit their policies and incentives structure to Invest India.
Subsequently, nine Sectors have been targeted, including electronics, automobiles, pharmaceuticals and telecoms.
Targeting big companies
According to a Reuters report, India is now targeting big firms like Apple, Foxconn and Wistron Corp. It aims to encourage these companies to shift their business from China to India due to the Sino-US trade war hit.
All the above four companies are giants in ICT (Information and Communication Technology). Foxconn, Wistron, and Pegatron Corp are Taiwan based companies.
Foxconn is also the world’s largest provider of electronics manufacturing services and the fourth-largest information technology company as per their revenue.
Wistron and Pegatron Corp. predominantly focus on ICT products, including desktop and notebook PCs, LCD TVs, servers and medical equipment. Even in July 2011, Wistron and Microsoft entered into an agreement covering Microsoft’s exclusive rights for Wistron products.
Indian Government to target foreign firms
On 14th August, several Indian Officials met and prepared a list of target companies that could invest in India on the verge of US-China Trade war. This stirred a global economic slowdown, prompting many companies to start looking for an alternative to China to escape higher tariffs.
Even US President Trump also said it in one of his tweets on 23rd August last month. This sparked speculation around the debate on Apple’s future investment in India.
India is late to capitalise on the Sino-US trade war
Many opine that India is late to capitalise on the Sino-US trade war. As different government ministries are now being asked to submit their policies and incentives structure to Invest India (national Investment Promotion and Facilitation Agency for foreign investors).
The Indian government and different state governments will be meeting “targeted companies” from 26th August to 5th September to suggest them the best zones for investment in India.According to a document seen by Reuters
Nine Sectors have been targeted, including electronics, automobiles, pharmaceuticals and telecoms.
Moreover, a complete detail regarding markets factors and Indian incentives will be prepared to be presented to potential investors.
Companies started investing in Vietnam
Most importantly, many companies have begun shifting to Vietnam from China due to Vietnam’s faster clearances and stable policies, making it a major global manufacturing hub. According to Nikkei Business daily report, Alphabet Inc’ Google is shifting its production of Pixel smartphone from China to Vietnam.
Indian incentives are questionable
Although, in August last month when Indian Finance Minister Nirmala Sitharaman announced measure to facilitate ease of doing business by reducing the surcharge on FPIs (Foreign Portfolio Investors), Rs. 70,000 capital infusion through PSB (Public Sector Banks) and Rs. 30,000 crores inflow in the automobile sector too.
However, the documents suggest that India is trying to explore the opportunities, but it is not sure whether the Indian government will dole out new incentives or will just detail the exiting ones.
“There is one other monster country that has a huge domestic market, India, but they have got to get moving.”Richard M. Rossow, senior advisor in US-India policy studies at CSIS (centre for strategic and international studies in Washington) said
India is the world’s second-largest smartphone market with growing potential.
Foxconn that assembles Apple Phones in India questions India presence as nations like China that offers more skilled workforce and well-organised ecosystem.
Any foreign investment depends on the policies and faster clearances that the host country provides and Indian market stands to be a protectionist one, which is the biggest hurdle for the investment.
Indian Officials met Automobile Companies
According to some official who attended the meeting said, last week Indian officials met the local delegates of Volkswagen, Hyundai Motor Co and Honda Motor Co to persuade them to shift some of their supply chains to India from China.
Further, the official added, “The government is looking at it as a great opportunity.”
However, the companies did not comment and responded to the Reuters request.
India still has room to capture the manufacturing
As India capability is not hidden from the world, but to cater the need of the market and the people is possibly the biggest challenge for the Indian government.
The trade sanction by the US is also a questionable situation for the investors to invest in Vietnam.
Moreover, Vietnam is a small country and the potential of growing to manufacture giant and capability to be a multitier supply chain is still not possible.
India still has plenty of room to capture the manufacturing sectors but need to ameliorate the trade practices that India is following towards the foreign investors.
Apple, who is seeing turbulent times as Chines tariffs imposed on US companies, is also thinking to shift its production.
Also, Apple sales in India have dropped from 3.2 million iPhones in 2017 to 1.7 million iPhones in 2018.
Moreover, by liberalising the surcharge can attract Apple to open manufacturing in India.
Indian government soon to start talks and meet foreign companies at their headquarters, and India will start this exercise first with Chinese companies based in China, which is scheduled to complete before 15th September of this month.