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On September 11, 2024
3 Sources
[1]
India's bid to match China's factory heft gets a reality check
NEW DELHI - India's push to become a factory titan has hit a snag: to become a credible alternative to China for global firms, it first needs to warm up to its long-time rival. Ties between the world's two most populous countries have been strained since a deadly Himalayan border clash in 2020, slowing the exchange of capital, technology and talent, despite exploding demand for electric vehicles, semiconductors and artificial intelligence. The Modi government's heightened vetting of all Chinese investment over this period effectively turned away billions of dollars from the likes of BYD, Great Wall Motor and created new layers of red tape for Indian firms with Chinese stakeholders. But now, New Delhi is looking to loosen some of these restrictions as businesses struggle to scale up manufacturing, even with a host of government subsidies designed to boost local production. "There is a realisation that you cannot be part of any major supply chains, especially in high technology products and certain areas like solar cells, EVs, where it is not possible for you to do anything without being part of Chinese supply chains," said Sushant Singh, lecturer at Yale University, who has also been a researcher for public policy think tanks in India. Even businesses that have supported barriers on Chinese imports acknowledge the need for key inputs from up north. Naveen Jindal, head of one of the country's largest steel firms Jindal Steel & Power and a federal lawmaker, has backed tariffs on Chinese steel but also sees the need for a pragmatic approach to trade. "A lot of steel companies import equipment and technology from China," Jindal said. "China is the world's largest producer of steel and in certain areas they are very good, but not in every area." Now, after four years of restrictions on Chinese investments and visas, Prime Minister Narendra Modi's government is looking to pivot closer to the Asian rival and breathe new life into his ambitions to "Make in India". "The government is considering easing investment rules that were introduced in 2020 for countries that India shares land border with as we need more investments," an official privy to government discussions told Reuters. New Delhi is now planning to add a clause that investments from firms with up to 10% Chinese shareholding will no longer require government approval, a move that could help global companies that have supply chain partnerships with Chinese firms easily invest in India. To address security concerns, the government is also planning to set up a post-investment monitoring framework driven by crime and fraud investigation agencies and the banking regulator. The move would encourage greater Chinese investment, which analysts say is critical to India joining global supply chains in high-technology sectors such as solar cells, EVs and battery manufacturing. The proposed easing is still being pushed by Modi's office with various sticking points between government ministries being ironed out, a second official, with direct knowledge of the matter said. Following industry lobbying, India has already eased visa issuance for Chinese nationals and is expediting visa approvals to Chinese engineers for sectors that get federal subsidies to manufacture locally. It has likely approved nearly 2,000 short-term visas to Chinese professionals, who accounted for most applications between November last year and July this year, another government official said. "In the visa process, there is rationality. On the ground it has not translated yet but the mindset shift has happened," Pankaj Mohindroo, head of the Indian Cellular and Electronics Association said. Indian foreign minister Subrahmanyam Jaishankar said this week the country is not "closed to business from China" but noted the issue was rather in which sectors and on what terms Beijing did business, without elaborating. India's Prime Ministers' office, finance, trade and foreign ministries did not reply to e-mailed requests for a comment. INEVITABLE After the 2020 clash with China, to lure Apple, the Indian government gave quick approvals to joint ventures between the U.S. giant's Chinese suppliers and Indian firms. The move has led to the phone maker moving 14% of its global iPhone assembly to India in the fiscal year 2023/24. In the same year, India's mobile exports increased 42% to a record $15.6 billion. However, even with such a shift there are doubts India's factories were big enough to match the investment or achieve the productivity gains of their Chinese counterparts. Indian Chief Economic Adviser V. Anantha Nageswaran said it was inevitable India would need to plug itself into China's supply chains. "Whether we do so by relying solely on imports or partially through Chinese investments is a choice that India has to make," Nageswaran said in July. A sharp decline in foreign investment into India has also prompted the rethink on trade barriers. Away from politics, Indian demand for Chinese goods remains robust, even with the targeted curbs. Goods imports have surged 56% since the 2020 border clash while India's trade deficit with China has nearly doubled to $85 billion. China continues to be India's biggest source of goods and was the largest supplier of industrial products last year. "We will be better off with some Chinese investment and technology flowing into our country without compromising national security concerns," Mohindroo said. (Additional reporting by Neha Arora in New Delhi; editing by Sam Holmes)
[2]
India's bid to match China's factory heft gets a reality check
NEW DELHI (Reuters) - India's push to become a factory titan has hit a snag: to become a credible alternative to China for global firms, it first needs to warm up to its long-time rival. Ties between the world's two most populous countries have been strained since a deadly Himalayan border clash in 2020, slowing the exchange of capital, technology and talent, despite exploding demand for electric vehicles, semiconductors and artificial intelligence. The Modi government's heightened vetting of all Chinese investment over this period effectively turned away billions of dollars from the likes of BYD, Great Wall Motor and created new layers of red tape for Indian firms with Chinese stakeholders. But now, New Delhi is looking to loosen some of these restrictions as businesses struggle to scale up manufacturing, even with a host of government subsidies designed to boost local production. "There is a realisation that you cannot be part of any major supply chains, especially in high technology products and certain areas like solar cells, EVs, where it is not possible for you to do anything without being part of Chinese supply chains," said Sushant Singh, lecturer at Yale University, who has also been a researcher for public policy think tanks in India. Even businesses that have supported barriers on Chinese imports acknowledge the need for key inputs from up north. Naveen Jindal, head of one of the country's largest steel firms Jindal Steel & Power and a federal lawmaker, has backed tariffs on Chinese steel but also sees the need for a pragmatic approach to trade. "A lot of steel companies import equipment and technology from China," Jindal said. "China is the world's largest producer of steel and in certain areas they are very good, but not in every area." Now, after four years of restrictions on Chinese investments and visas, Prime Minister Narendra Modi's government is looking to pivot closer to the Asian rival and breathe new life into his ambitions to "Make in India". "The government is considering easing investment rules that were introduced in 2020 for countries that India shares land border with as we need more investments," an official privy to government discussions told Reuters. New Delhi is now planning to add a clause that investments from firms with up to 10% Chinese shareholding will no longer require government approval, a move that could help global companies that have supply chain partnerships with Chinese firms easily invest in India. To address security concerns, the government is also planning to set up a post-investment monitoring framework driven by crime and fraud investigation agencies and the banking regulator. The move would encourage greater Chinese investment, which analysts say is critical to India joining global supply chains in high-technology sectors such as solar cells, EVs and battery manufacturing. The proposed easing is still being pushed by Modi's office with various sticking points between government ministries being ironed out, a second official, with direct knowledge of the matter said. Following industry lobbying, India has already eased visa issuance for Chinese nationals and is expediting visa approvals to Chinese engineers for sectors that get federal subsidies to manufacture locally. It has likely approved nearly 2,000 short-term visas to Chinese professionals, who accounted for most applications between November last year and July this year, another government official said. "In the visa process, there is rationality. On the ground it has not translated yet but the mindset shift has happened," Pankaj Mohindroo, head of the Indian Cellular and Electronics Association said. Indian foreign minister Subrahmanyam Jaishankar said this week the country is not "closed to business from China" but noted the issue was rather in which sectors and on what terms Beijing did business, without elaborating. India's Prime Ministers' office, finance, trade and foreign ministries did not reply to e-mailed requests for a comment. INEVITABLE After the 2020 clash with China, to lure Apple, the Indian government gave quick approvals to joint ventures between the U.S. giant's Chinese suppliers and Indian firms. The move has led to the phone maker moving 14% of its global iPhone assembly to India in the fiscal year 2023/24. In the same year, India's mobile exports increased 42% to a record $15.6 billion. However, even with such a shift there are doubts India's factories were big enough to match the investment or achieve the productivity gains of their Chinese counterparts. Indian Chief Economic Adviser V. Anantha Nageswaran said it was inevitable India would need to plug itself into China's supply chains. "Whether we do so by relying solely on imports or partially through Chinese investments is a choice that India has to make," Nageswaran said in July. A sharp decline in foreign investment into India has also prompted the rethink on trade barriers. Away from politics, Indian demand for Chinese goods remains robust, even with the targeted curbs. Goods imports have surged 56% since the 2020 border clash while India's trade deficit with China has nearly doubled to $85 billion. China continues to be India's biggest source of goods and was the largest supplier of industrial products last year. "We will be better off with some Chinese investment and technology flowing into our country without compromising national security concerns," Mohindroo said. (Additional reporting by Neha Arora in New Delhi; editing by Sam Holmes)
[3]
From rival to reluctant partner: India's evolving stance on Chinese investment
India's push to become a factory titan has hit a snag: to become a credible alternative to China for global firms, it first needs to warm up to its long-time rival. Ties between the world's two most populous countries have been strained since the border clash in 2020, slowing the exchange of capital, technology and talent, despite exploding demand for electric vehicles, semiconductors and artificial intelligence. The Modi government's heightened vetting of all Chinese investment over this period effectively turned away billions of dollars from the likes of BYD, Great Wall Motor and created new layers of red tape for Indian firms with Chinese stakeholders. But now, New Delhi is looking to loosen some of these restrictions as businesses struggle to scale up manufacturing, even with a host of government subsidies designed to boost local production. ALSO READ: With or without Chinese companies is the question "There is a realisation that you cannot be part of any major supply chains, especially in high technology products and certain areas like solar cells, EVs, where it is not possible for you to do anything without being part of Chinese supply chains," said Sushant Singh, lecturer at Yale University, who has also been a researcher for public policy think tanks in India. Acknowledging the need Even businesses that have supported barriers on Chinese imports acknowledge the need for key inputs from up north. Naveen Jindal, head of one of the country's largest steel firms Jindal Steel & Power and a federal lawmaker, has backed tariffs on Chinese steel but also sees the need for a pragmatic approach to trade. "A lot of steel companies import equipment and technology from China," Mr. Jindal said. "China is the world's largest producer of steel and in certain areas they are very good, but not in every area." Should India reconsider its China FDI policy? | In Focus podcast Now, after four years of restrictions on Chinese investments and visas, Prime Minister Narendra Modi's government is looking to pivot closer to the Asian rival and breathe new life into his ambitions to "Make in India". "The government is considering easing investment rules that were introduced in 2020 for countries that India shares land border with as we need more investments," an official privy to government discussions told Reuters. New Delhi is now planning to add a clause that investments from firms with up to 10% Chinese shareholding will no longer require government approval, a move that could help global companies that have supply chain partnerships with Chinese firms easily invest in India. To address security concerns, the government is also planning to set up a post-investment monitoring framework driven by crime and fraud investigation agencies and the banking regulator. The move would encourage greater Chinese investment, which analysts say is critical to India joining global supply chains in high-technology sectors such as solar cells, EVs and battery manufacturing. The proposed easing is still being pushed by Mr. Modi's office with various sticking points between government ministries being ironed out, a second official, with direct knowledge of the matter said. Following industry lobbying, India has already eased visa issuance for Chinese nationals and is expediting visa approvals to Chinese engineers for sectors that get federal subsidies to manufacture locally. It has likely approved nearly 2,000 short-term visas to Chinese professionals, who accounted for most applications between November last year and July this year, another government official said. "In the visa process, there is rationality. On the ground it has not translated yet but the mindset shift has happened," Pankaj Mohindroo, head of the Indian Cellular and Electronics Association said. Minister of External Affairs S. Jaishankar said this week the country is not "closed to business from China" but noted the issue was rather in which sectors and on what terms Beijing did business, without elaborating. The Prime Ministers' office, finance, trade and foreign ministries did not reply to e-mailed requests for a comment. Inevitable After the 2020 clash with China, to lure Apple, the Indian government gave quick approvals to joint ventures between the U.S. giant's Chinese suppliers and Indian firms. The move has led to the phone maker moving 14% of its global iPhone assembly to India in the fiscal year 2023/24. In the same year, India's mobile exports increased 42% to a record $15.6 billion. However, even with such a shift there are doubts India's factories were big enough to match the investment or achieve the productivity gains of their Chinese counterparts. Chief Economic Adviser V. Anantha Nageswaran said it was inevitable India would need to plug itself into China's supply chains. "Whether we do so by relying solely on imports or partially through Chinese investments is a choice that India has to make," Mr. Nageswaran said in July. A sharp decline in foreign investment into India has also prompted the rethink on trade barriers. Away from politics, Indian demand for Chinese goods remains robust, even with the targeted curbs. Goods imports have surged 56% since the 2020 border clash while India's trade deficit with China has nearly doubled to $85 billion. China continues to be India's biggest source of goods and was the largest supplier of industrial products last year. "We will be better off with some Chinese investment and technology flowing into our country without compromising national security concerns," Mr. Mohindroo said. Published - September 11, 2024 12:36 pm IST Read Comments
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India's efforts to boost its manufacturing sector and compete with China's industrial prowess are encountering significant hurdles. Despite government initiatives, the country struggles to match China's scale and efficiency in production.
India has been making concerted efforts to bolster its manufacturing sector, aiming to position itself as a viable alternative to China for global companies. The government's "Make in India" initiative, launched in 2014, sought to transform the country into a global manufacturing hub 1. However, recent developments suggest that India's journey to match China's factory heft is facing significant challenges.
Despite attracting major players like Apple to set up production facilities, India is struggling to replicate China's manufacturing scale and efficiency. The country's share of global exports of manufactured goods remains at a modest 1.8%, while China commands a substantial 16% 1. This disparity highlights the enormous gap India needs to bridge to compete effectively with China in the global manufacturing arena.
Apple's foray into Indian manufacturing serves as a case study of the challenges faced by global companies. While Apple has successfully started producing iPhones in India, the scale and efficiency of operations lag behind those in China. The company has encountered issues such as dust and absenteeism at its contract manufacturers' facilities in India 2. These problems have led to lower productivity and higher costs compared to Chinese operations.
One of the key factors hampering India's manufacturing growth is its underdeveloped infrastructure and logistics network. Unlike China, which boasts efficient transportation systems and well-established supply chains, India struggles with inadequate roads, ports, and power supply in many regions. These limitations make it difficult for manufacturers to operate at optimal efficiency and scale 1.
Interestingly, while India aims to compete with China in manufacturing, it is also reassessing its stance on Chinese investments. The Indian government has shown signs of softening its previously stringent approach towards Chinese capital 3. This shift suggests a recognition of the potential benefits that Chinese expertise and investment could bring to India's manufacturing sector.
To address these challenges, the Indian government has introduced various policy measures, including production-linked incentive schemes to attract manufacturers. However, industry experts argue that more comprehensive reforms are needed to create a truly competitive manufacturing ecosystem. These include streamlining regulations, improving labor laws, and significantly enhancing infrastructure 1.
As India continues its quest to become a global manufacturing powerhouse, it faces the dual challenge of overcoming internal obstacles while navigating the complex geopolitical landscape. The country's ability to address these issues will be crucial in determining its success in rivaling China's manufacturing dominance in the coming years.
Reference
[2]
India is making significant strides in the semiconductor industry, aiming to become a major player in the global market. The country's strategic initiatives and partnerships are positioning it to compete with established semiconductor giants.
3 Sources
India's economic landscape is evolving, with a growing emphasis on the role of public enterprises. This article explores the rationale behind creating new public sector units (PSUs) and their potential impact on the country's economic growth and development.
2 Sources
Chinese tech firms are exploring opportunities in Silicon Valley, facing both challenges and potential for growth. This shift comes as they navigate geopolitical tensions and seek to expand their global presence.
2 Sources
The United States implements stricter semiconductor export controls, while China finds ways to circumvent AI chip bans. This ongoing tech conflict threatens to reshape the global technology landscape.
2 Sources
India's potential in the semiconductor design industry is gaining attention. Experts suggest focusing on design capabilities and creating a national brand to establish a strong presence in the global market.
2 Sources