US Investment In India:
61% US US-based firms want to invest in India & not China due to various advantages like cheap labour, better geographical conditions, a Developing nation, the fastest growing economy, fastest trade centre in the world!
OnePoll Survey:
This was known by the 500 executive-level U.S. managers surveyed by market research OnePoll, 61% said they would pick India over China if both could manufacture the same materials at the same time at the same costs!
The survey also showed that 59% of businesses found it “little risky” or “very risky” to source materials from China, compared with 39% of respondents for India!
US-based Companies are seeing India as a long-term investment strategy & business opportunity as opposed to a short-term pivot to avoid tariffs, said Samir Kapadia, CEO of India Index of Vogel Group
US-based companies feel China will now be a risky bet for proper investment due to international relations between China & US not going well, while India as China’s neighbour is becoming centershop for every other Western country!
56% of people also want their business supply chain to be in India & not China in the next 5 fiscal years!
At least 30% of executives who participated in the independent, third-party survey by OnePoll commissioned by Marketplace India Index in December, do not currently import from either China or India but they will consider India as their choice
US And Indian Relationship:
US President – Joe Biden & Indian Prime Minister – Narendra Modi, share a friend-shoring policy which includes US-based firms with certain benefits for taxation policy & less initial capital investment in India!
Modi’s June White House visit has changed everything between US & India, large collaboration of the defence & G20 summit between them has encouraged all business executives to watch India as the best option for investment!
The U.S. and China continue to sit in rather chilling air within a mild cold war & not too good of a Whereas there is a constant stream of iterations, conversations, dialogues & agreements between the U.S. and India!
India has seen a flurry of announcements about investments into USA in the recent years from 2015!
Meanwhile, Maruti Suzuki has also announced that it would invest $4.2 billion to build a 2nd factory in India along with Vietnamese-based electric vehicles producer – VinFast also said in January that it aims to spend around $2 billion aka ₹16,000 crores to set up a factory in India!
A Big Risk Still Remains:
Despite the optimism, U.S. firms are still a little cautious of India’s supply chain capabilities like quality degradation, delayed production or target of projects etc.
OnePoll survey showed that 55% of the businesses found quality assurance was a “medium risk” they would face if they had a factory in India!
In September 2023, Apple chain supplier in India, Pegatron temporarily shut its operations at its factory in the Chengalpattu area near Chennai after a fire breakout caused minor damage to the area
Delivery risk (48% found the risk) & IP theft (48% agreed cyber hacking) were also a worry for U.S. firms looking at India, India has a huge amount of cyber theft cases which US-based firms worry about most!
Other firms looking to fully or partially move their supply chains to India say they will need proper plans & capital + land centre & may not copy Apple’s fast presence in the country, warned expert Amitendu Palit, senior research fellow & research lead of trade & economics at the Institute of South Asian Studies cited sources from CNBC
Conclusion:
Many companies want to set up their factory & project shifts in India, but cannot do that at a rapid pace like Apple which is a huge setback to such firms they need time & plan to do it properly, the Indian government has shown green flags to all types of businesses investment in India taking a step ahead they will even help them by investing in their businesses!
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