Apple Is Ready To Ditch China For India. But, Is India Ready?

Apple Is Ready To Ditch China For India. But, Is India Ready?

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New Delhi: After years of lobbying and struggling in the Indian market, it seems America’s mobile handset maker Apple has finally decided to shift 20 percent of iPhone manufacturing to India even as it moves out of China. But is the American iconic conglomerate moving base to India purely because it is kicked by the country’s growth and development? Or, is the California-based compelled to do so owing to soaring US-China tensions, America’s foreign policy tilt towards the Indo-Pacific, arising out of which is the Indo-Pacific Economic Framework (IPEF), increasing closeness between the US and India, and supply chain disruptions owing to a multitude of factors from the pandemic to the war.

First, let us look at some of the factors that make India the cynosure of global investors. India is expected to grow at a rate of 6 per cent or above according to World Bank estimates, the gigantic Indian market teeming with millions who are willing to spend on the latest and most stylish handset, easier foreign direct investment rules, and a vast network of skilled manpower. And encompassing all these today is an additional factor that is pushing India into the drawing board of investors is its closeness to America, coupled with Narendra Modi’s government for technological advancement and push for digital transformation.

The government has also recently rolled out a $25 billion incentive package to attract investments across various sectors from electronics to automobiles to textiles and others. The Modi government has claimed that it has undertaken several reform measures to boost the economy that will propel its growth from $2 trillion to $5 trillion. In fact, the Prime Minister recently claimed that if he gets a staggering third term in 2024, he will bring India in the top three economies of the world. “In my third term, India will be among the top three economies in the world…Yeh Modi ki guarantee hain,” the Prime Minister said last month.

Hard-selling India as a viable investment destination for global investors at a time when the world is in a geopolitical mess, seems to be a brilliant idea but for that India has to put its own house in order which is currently in a bigger mess currently that can neither be ignored by the world nor can India defend itself by giving the excuse that it is its internal matter. Because India is now a global player and what happens inside India has an impact on how global investors will see us.

Last month Prime Minister Modi addressed French CEOs where he presented, as is expected of any leader of a country, the progress made by the country across all verticals of the economy from infrastructure to energy to pharma, and India’s plans to become a manufacturing hub. “Prime Minister encouraged the CEOs to utilize the investment opportunities in India and be a part of India’s growth story,” said a statement issued by the Prime Minister’s Office.

However, behind closed doors and in industry events global investors continue to express concerns over India’s overall regulatory regime, particularly the taxation structure. Investors have been making a beeline in front of the Ministries of Finance, Commerce, and others to ensure they get a fair deal. Atul Keshap, President, US-India Business Council at the US Chamber of Commerce had told me in an interview, earlier this year that India continues to be “more expensive” compared to China, Mexico or Vietnam, and that American businesses expect “transparency and predictability” and it is not easy to do business in this country. Last month, when Japan’s Foreign Minister Yoshimasa Hayashi was visiting New Delhi, he met Japanese companies operating in this country and they told him that they would like to see a more “predictable, transparent and stable” business regime in India.

Another aspect that continues to ail India’s business environment and something that makes life more difficult for investors to put money here is the fact that the country is not part of any credible multilateral trade agreements be it the former Trans-Pacific Partnership or the Regional Comprehensive Economic Partnership (RCEP). In fact, it is due to America’s constant nudging that India is now grudgingly sitting inside the IPEF even as New Delhi has made it clear that it does not want to be part of the trade pillar. This makes it difficult for India to be truly part of a global value chain that will strengthen the country’s own supply chains.

To make matters worse, the government recently has taken certain steps that have again put a question mark on the country’s image as a credible investment destination. The government recently announced that it will impose a 28 per cent Goods and Services Tax (GST) on online gaming involving real monetary transactions, pushing global investors in this space to write a letter to the Prime Minister urging a review of the decision. The imbroglio around the government’s yet another decision to impose tax on angel investors have shaken the start-up world. Just as August began, India restricted the import of laptops, tablets, and personal computers. Such a move does not give the image of a country that believes in a stable business environment.

Putting The House In Order

As Prime Minister Modi was presenting that rosy picture of India to the world while he courted French CEOs last month, tensions and violence in Manipur were rising. The situation reminded many of the ‘India Shining’ campaign of 2004 by the Atal Bihari Vajpayee government. The ripple effect of the violence in Manipur has reached the doors of the White House too. The US Ambassador to India Eric Garcetti has already expressed concerns.

Several diplomats of certain key countries have expressed serious concerns over the worsening security situation in India’s northeast. India has massive infrastructure development plans in the northeast in collaboration with countries like Japan to build a wide network of rail, roads, bridges, and other connectivity channels there in order to tap the full potential of the Southeast Asian markets. But it seems the condition in Manipur and its cascading effect in Nagaland and Mizoram will bring all the plans to a prolonged halt.

While Manipur continues to burn, India’s glittering business hub Gurugram, located on the outskirts of the capital New Delhi witnessed violence leading to killings and destruction of private property and businesses. Migrant labourers are once again winding up their lives from Gurugram and going back to their hometowns while protests by Hindu right-wing groups continue leading to more disturbance. And In a few days from now, India will be hosting the G20 Summit for the first time where leaders from all around the country will come down to the capital. Factories and offices in Gurugram had to remain shut down for two days owing to massive losses. In Maharashtra, which is regarded as the financial capital of the world, political instability coupled with poor infrastructure continues to frighten investors.

If India is serious about the likes of Apple, Foxconn, General Electric, General Atomics, Walmart, and others setting up shop in India while taking forward the government’s ‘Make in India’ campaign, then it will be detrimental for the party which has been promising the moon to the investors. This is the right time for India to emerge as a credible investment destination it always struggled to be. The Covid pandemic, Russia-Ukraine War, and increasing tensions between US and China have all indirectly given India an opportunity to be the true player in the ’China plus one’ strategy.

[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP News Network Pvt Ltd.] 

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