Indian companies should seek cooperative development rather than trying to replace Chinese firms

By Long Xingchun Source:Global Times Published: 2020/4/28 23:23:13

Illustration: Luo Xuan/GT

Indian firms are facing an opportunity to seek cooperative development rather than taking risks by "replacing" Chinese companies amid the coronavirus pandemic as certain Indian politicians have hinted. India needs to increase efforts to improve its business environment to attract investment.

Minister for Road Transport and Highways of India Nitin Gadkari recently said that Indian firms should take advantage of the world's strong hatred for China and produce goods that are highly dependent on Chinese manufacturers. He noted that a lot of countries now do not want Chinese products, and India should try to lure firms looking to relocate from China. 

However, the so-called "strong hatred" for China does not represent the standpoint of any nation or mainstream society. The global demand for China's virus prevention materials has accelerated in the last two months, and most supplies have been purchased through commercial pathways. Some have complained that China has not exported sufficient supplies, yet the Shanghai Pudong International Airport has become the world's busiest airport amid the pandemic.

According to data from China's General Administration of Customs, China's trade in the first quarter dropped 6.4 percent year-on-year to 6.57 trillion yuan ($927.3 billion) due to the Spring Festival and coronavirus outbreak, and the decline slowed in March to 0.8 percent year-on-year. The claim that "many countries don't want Chinese products" is inconsistent with the truth. India's imports from China have also been increasing rapidly in recent years.

It is understandable that countries are now calling for the return of their manufacturing industries as medical supplies have become strategic materials amid the pandemic. However, commercial investments and production are market-oriented moves, and only foreign politicians and China critics are calling for businesses to leave China - the world's factory and its second largest consumption market - rather than entrepreneurs. 

Moreover, India itself needs to increase efforts to attract foreign investment as its Make in India campaign has not gained much traction despite the global market holding a positive attitude toward the Indian economy over past two decades. It is India's insufficient investment environment that needs to change.

Apple and Foxconn have in the past proposed large-scale investment plans in India, though they failed to bear fruit. 

India needs a complete industrial chain and a full range of horizontal facilities for the middle and end segments of industries to make fast deliveries and lower costs. India does not yet have the basis for the development of complete industrial chains.

Manufacturers need land and labor in addition to equipment, techniques and funding, and acquiring land for factories is a long and difficult process in India. The country has a large population and a relatively high illiteracy rate, with many young people lacking essential education and skills. Four Indian workers are needed to replace one Chinese worker, according to the experience of some foreign firms in India.

With a large market, rich natural resources, a relatively stable political environment and a fair geo-political status, India has its advantages. But still needs to increase efforts in order to make use of them. Foreign and Chinese firms are willing to invest in India so long as it develops a better business environment. From this perspective, China and India could be friends rather than rivals.

The author is a senior research fellow of Academy of Regional and Global Governance under the Beijing Foreign Studies University.


blog comments powered by Disqus