13 September , 2020 Fdiindia
India to Attract Global Manufacturers Through $23 billion Package
The Indian Government will be offering $23 billion (INR 1.68 trillion) worth package in order to lure the global manufacturing companies for establishing their manufacturing in India.
Production linked incentives will be provided to automobile manufacturers, solar panel makers, and specialty stell to consumer appliance companies by Prime Minister Narendra Modi's government.
The sectors that are also in consideration are the textile units, food processing plants, and specialized pharma product makers.
This move has been taken by the government for attracting business to India from China.
In India, around 2 dozen companies have said to invest $1.5 billion for establishing mobile phone factories. These companies include Samsung Electronics Co, Hon Hai Porecision Industry CO (Known as Foxconn and Wistron Crop).
The government authorities have offered these companies for paying to them 4%-6% of the incremental sales that the companies get in the coming five years.
The government's main aim is to attract the maximum of investments in the country for the revival of the economy that faced the worst slump along with the other big economies of the world in the last quarter. The contraction in the economy of India in the last quarter was 23.9%.
In order to increase the ease of doing business, the insolvency rules were rebuilt. But the measures taken by the government for increasing the ease of doing business in India did not make India the first preference for the businesses that are on the lookout for developing their supply chains away from China.
The destinations that are most favoured by the businesses for diversifying supply chains according to a survey by Standard Charted Plc are Vietnam, Cambodia, Myanmar, Bangladesh, and Thailand.
To increase the local value addition in the manufacturing sector, the government will be introducing a phased manufacturing program.
The government is in process of working out the programs.
According to government data, India has imported goods from China worth $65 billion and the exports to China were at $17 billion, which shows a trade deficit of $48 billion.