Why is India not able to attract the companies that leave China?

We all know how fierce the ongoing trade feud between China and the United States is. This has allowed Chinese businessmen and manufacture to shift their base from China to Southeast Asian countries like Vietnam. Therefore, instead of a bigger nation like India, smaller nations are winning the battle and it seems that South Asian countries are not benefitting from this trade war at all.

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Why is India not able to attract the companies that leave China?
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The easiest way in which Chinese manufacturers can win the US-China trade war is by providing cheaper products which China is traditionally known for. However, it means that the Chinese companies can either invest in automation technologies or they can move their location to places that are cheaper in times of production costs and labor costs. Many companies are choosing the latter option and this is providing huge opportunities to the developing nations of Asia.

Chinese manufacturers are huge not only in terms of production but also in terms of the industrial revolution and employment it can bring in a developing nation. Therefore, it can play a huge role in the development of economically weaker countries like Pakistan and India. However, neither of these countries is tapping in these opportunities.

View More: US-China Trade War and Its Implication on India

If we speak about India individually, we can say that the Indian government is overconfident of attracting foreign investors and companies just because it has a massive population. However, that cannot be the only factor that can inspire foreign investors and manufacturers to set up their facilities and plants in India. The government has to work on its foreign policies, tax subsidies to foreign investors, import duty, and many other factors that can lure foreign manufacturers and investors.

That being said, Vietnam is certainly the clear winner at present as they are managing to attract most of the Chinese manufacturers and investors despite the hostile relations that these countries had in the past. The fact is that even the African countries like Ethiopia have benefited hugely from the foreign investments in the recent past apart from Vietnam. On the other hand, South Asian countries are not looked upon as ideal for investment these days due to terrorism, stringent tax policies, and many other aspects.

The combined GDP of South Asian countries is seventy percent bigger than the GDP of African countries. However, we cannot forget that most of this GDP was due to the investment of Chinese companies and manufacturers. The sad news is that in the recent past, Chinese companies and manufacturers have shown more interest in investing in African countries as compared to the South Asian countries. A recent survey reported that Chinese investors have closed-in 13 deals with the African countries as compared to 9 deals with South Asian countries.

View More: US-China trade war and impact on the world economy

Indian economy is still heavily reliant on agriculture and the Indian governments have always focussed on fortifying the development with the help of service-based industries. However, this has only remained in their fantasies as there has not been any development on the ground. Therefore, South Asian countries including India cannot miss the growth that the manufacturing industry can bring.

Referencehttps://economictimes.indiatimes.com/markets/stocks/news/why-factories-leaving-china-arent-going-to-india/articleshow/71462428.cms?from=mdr


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Article Name
Why is India not able to attract the companies that leave China?
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We all know how fierce the ongoing trade feud between China and the United States is. This has allowed Chinese businessmen and manufacture to shift their base from China to Southeast Asian countries like Vietnam. Therefore, instead of a bigger nation like India, smaller nations are winning the battle and it seems that South Asian countries are not benefitting from this trade war at all.