On 13th May, PM of India announced it the financial package of 20 trillion which is 10% of GDP, PM further bolsters the concept of “Self -Reliance” to promote domestic growth and saving them from holistic takeovers from MNCs. COVID-19 has provided a chance to turn a crisis into an opportunity. Irrespective of the fact that “Self-Reliance” will be the motto, India is committed to global welfare, it will create the supply chains that will connect India on the global level.
As per, NITI Aayog Coastal Economic Zones will be set up to attract companies which are planning to exit China since last few years, might be due to they don’t want to get trapped in US-China Trade war additionally labor and supply chains are getting costly so firms will rely on the second-largest economy.
But why are companies are not looking towards India as the second spot after China for their businesses? Why are all companies preferring Vietnam and Bangladesh over India? The reason is straight forward; India is lacking in well-functioning land and labor laws. International Growth Centre said ease of doing business is another hurdle for which steps were taken but not enough to attract firms. Another big reason companies might be uncertain about India is they need a guarantee that the policy regime will not be changed the midway which had happened in past, the current government might not do it but the successor government can.
There is a long way to go to attract the firms that are willing to exit China, however, China can retain multi-national corporations, providing India with little space to woo them.
by Niyati Bhagat