A few days ago, Yogi Government suspended all labor laws except the essential ones to lure foreign companies moving their manufacturing units out of China. The Yogi government is taking all the necessary steps to make Uttar Pradesh a manufacturing hub and attract companies moving out of China after the Coronavirus pandemic.
The result of the steps taken by the Modi government and Yogi Government in UP are already visible as German footwear brand, Von Wellx, has decided to move its factory operations from China to Agra, Uttar Pradesh. The company has more than 10 crore customers in more than 80 countries.
Von Wellx is owned by Casa Everz Gmbh, and the company was approached by Indian government authorities as it was looking to move production out of China. The company collaborated with Latric Industries Pvt Ltd to manufacture shoes. According to Ashish Jain, CEO and Director of Latric Industries Pvt Ltd, the partnership would create more than 10,000 direct and indirect jobs in the city of Agra.
“We are very happy to see that investment from Casa Everz Gmbh, which will be giving employment to so many people, is coming to India from China and especially to Uttar Pradesh,” said state MSME minster Uday Bhan Singh.
Vox Wellx was launched in India is 2019 at 500 online and offline stores across the country. The company wants to expand in the Indian market and manufacturing domestically would help to reduce the cost. Moreover, given the fact that the Chinese market is saturating and labour cost has gone up, it is costly to manufacture in China and at the same time there is no scope for expansion on the consumer base.
On the other hand, in India, the consumer market is expanding and the labor cost is low, therefore, the manufacturing cost would be low and at the same time the German brand could expand its customer base.
After the Coronavirus outbreak in China and its mishandling of the crisis leading to a pandemic, many countries are looking to move manufacturing units away from China. In fact, many countries that are arch-enemies of China but have manufacturing units in China, like Japan, are incentivizing companies to move out, and this presents a golden opportunity to India, especially the industrially backward states like UP, Bihar where labor cost is extremely low.
UP has the existing capacity to replace China as ‘factory of the world’ with a population of 22 crores and a young demography. With the outbreak of Coronavirus and the anger towards China, the companies of developed nations that have manufacturing units in China are looking for other avenues.
The UP government has shown the most pro-active approach in the last few weeks to attract these companies and this has resulted in ongoing talks with many Korean and American companies over shifting manufacturing units to the state.
Previously South Korean electronics major agreed to set up manufacturing units in Uttar Pardesh and state officials held a webinar with 100 US firms like Adobe, Boston Scientific, and UPS to shift their units from Shanghai to Noida, which is already a known popular IT hub.
Speaking to HT, the state cabinet minister Siddharth Nath Singh said, “The US has a significant investment in China. Prime Minister and Chief Minister want to use the opportunity where industries are moving out of China and see how they can be brought to India, especially to UP. Video-conferencing was held with over 100 American companies yesterday, in a webinar. They’ve shown interest,”
Earlier, smaller nations like Vietnam were winning the race against India at attracting companies moving from China, but after the COVID-19 crisis, the Indian government, union as well as states, announced many reforms in land, labor laws, and liquidity to make the country a more favorable investment destination. And, it seems, these reforms have already started paying off.