For companies looking to shift their factories from China to India, the Prime Minister’s Office, NITI Aayog and the Department for Promotion of Industry and Internal Trade (DPIIT) are preparing an incentive plan.
Companies considering moving their factories from China to India are being given special advantages in India. The Prime Minister’s Office, NITI Aayog and the Department for Promotion of Industry and Internal Trade (DPIIT) are preparing a plan that will include an initiative to give manufacturers in China an incentive to shift factories to India. These would be similar to the incentives given with the intention of promoting manufacturing in India of incentive electronics and medical devices.
After the Coronavirus crisis, many multinationals did not want to limit their production capacity and supply chain in one place. The government will form several groups to negotiate with companies that want to exit China. A senior government official told, ‘Incentives like electronics and medical devices can also be given to some other sectors. It is being considered. ‘
The official said that with the addition of corporate tax cuts last year, giving additional incentives will make India’s competitive capability similar to Vietnam. In September last year, the government reduced the corporate tax rate to 22% without any incentive. This is 15% for new manufacturing companies.
DPIIT already has a list of states that can give clearance for manufacturing projects soon and who also have large pieces of land. “Many countries now want their industry to diversify manufacturing,” the official said, adding that India has made major changes in its policies to become an attractive destination as an alternative to China. Along with this there is also a large market in the country which is an added advantage compared to other countries.
The government has held talks with about 100 MNCs that have manufacturing units in China and want to move out of there. Japan has announced a $ 2.2 billion package to help its manufacturing companies shift from China. The supply chain has had a major impact on the outbreak of the Corona virus in China.
India’s earlier focus was on becoming a part of the global supply chain, but now the government wants to make the country a hub of large components and finished products of the supply chain. Apart from this, the government also aims to reduce dependence on import of important products from China. For this, efforts are also being made to increase production in the country of important raw materials of the pharmaceutical industry such as Active Pharmaceutical Ingredients (APIs). Many automobile companies of the country also import components on a large scale from China.