Since the outbreak of Coronavirus, the hatred against China has grown manifold in the countries around the world. Western countries, which fuelled the Chinese economy by setting up factories in the Communist country, are hard hit by Coronavirus. So far, the US and Europe account for more than half of total cases around the world and above two-third of total deaths. The global economy is reeling due to Coronavirus lockdown, and the countries which have been hit are trying to get their businesses out of China. Nitin Gadkari sees a golden opportunity here.
However, the real question is, whether India, a country with cheap labor and a huge market like China, could benefit from ‘hatred’ against the Communist country and attract the companies fleeing out of the Communist country. Nitin Gadkari, Minister of Transport, who is among senior leaders of the party and his influential voice in the Modi government, asked the same question in an interaction with Overseas Indian students.
Across the world, there is “hatred for China. Is it possible for us to convert it into an opportunity for India?” asked the senior leader. Nitin Gadkari referred to the package announced by China for the Japanese companies moving factories out of the Communist country and said, “I feel that we should think on that and we will concentrate on it. We will open the Indian scenario for that. We will give the clearances and everything to them and attract foreign investment.”
A few days ago, Shinzo Abe led Japanese government announced financial package for Japanese companies which are planning to shift their base out of China. Out of a stimulus package worth whopping 108.2 trillion yen (US $993 billion) – equal to 20 percent of Japan’s economic output –it has earmarked US $2.2 billion to help its manufacturers shift production out of China.
220 billion yen ($2 billion) is pledged for Japanese companies shifting production back to Japan and the remaining 23.5 billion yen for those seeking to move production to other countries.
Japan is not the only country which wants its companies to move their manufacturing base out of China. Many developed nations in Europe and America, which have manufacturing plants in China, are also planning for the same United States is mulling over to incentivize the companies planning to shift production base out of China to their own country, or some other country with cheap labor and strong government like India, Thailand, Vietnam.
The Indian government was hoping that India would be biggest gainer from flight, given the young demographics and cheap labour. But, as per a study by Nomura Group on 56 companies shifting production out of China, only three of these relocated to India while 26 went to Vietnam, 11 to Taiwan, and eight to Thailand.
Southeast Asian countries and the tiny island of Taiwan are winning at welcoming the flight of companies from China, while India, with a young population and cheap labour, is losing the game.
Most of these companies are shifting to Vietnam, a Communist country to the South of China with a long sea coast facing the busy South China Sea. There are many factors that help the country with a population of around 10 crores in attracting new companies. It has geographical and cultural proximity with the Communist giant, and even the political system is similar- a single-party Communist state. The companies prefer autocratic Communist countries as there is no bureaucratic lethargy and democratic red tape in these countries.
On the other hand, in India, even after a project is cleared by the government, the companies have to deal with the farmers for factory land, lethargic and corrupt bureaucracy, local mafia, mafia-like NGOs, local trade unions, the government’s obsolete labour laws- which Modi government is trying to reform, to successive court cases and petitions by activists like Prashant Bhushan, and various regulatory bodies, and whatnot.
If the Modi government does not want to lose a golden opportunity like this once again then it must fast track the land, labour, capital, and judicial reforms from the war room to make sure that the companies fleeing China move to India, not Vietnam. The words of Nitin Gadkari are direct and suggest that the government is looking to tap the opportunity.