Factors That Will Make India A Favourable Business Continuity Destination

In a post COVID world, when increasingly global manufacturers understand the inherent risk in concentrating the entire supply chain in one location, India will emerge as a formidable business continuity destination.

Numerous organizations will like to shift their supply chain from China while others will look forward to a China+1 strategy to reduce their dependency on China. Amidst such emerging paradigms, India will emerge as a viable alternative. A large domestic market, favorable FDI policies, & overall improvement in the business environment will draw the attention of international manufacturers. India also has a large quantity of affordable labor force, large land banks, & plenty of natural resources.

Bridging the Infrastructure Gap

In past India's poor infrastructure has undermined its potential in realizing manufacturing-led growth. However, the last few years have seen the country making significant progress towards bridging the infrastructure gap. Under the ambitious Bharatmala Project, India is seamlessly connecting various parts of the cities through extensive networks of highways and expressways. From once building a meager 2 KMs of roads each day, the country is now developing over 30 KMs of highways every day.

The northern state of Uttar Pradesh, which has a population the size of Brazil, is already forming an economic task force to attract firms keen to move out from China.

India is also readying a pool of land twice the size of Luxembourg to offer companies that want to move manufacturing out of China, and has reached out to 1,000 American multinationals, as per media reports.

Implementation is going at full pace on the Delhi Mumbai Industrial Corridor (DMIC), which will incorporate over 9 industrial clusters, massive power generation facilities alongside robust logistic facilities. DMIC is a USD 100 billion project and is counted amongst one of the largest infrastructure projects in the world. Passing through 6 states, DMIC once completed will transform the lives of millions of Indian households.

To further boost export-oriented trade, India under the flagship of Sagarmala Project has identified over 500 projects which include setting up new Greenfield ports, modernizing existing ports, enhancing connectivity to ports, & developing manufacturing and business zones namely Coastal Economic Zone (CEZ) near the seashore. Already projects worth USD 64 billion are under implementation. Through capacity building India aims to take port-led export to 2500 million tonnes by 2025 from the current 1500 million tonnes.

Although, putting together land banks & manufacturing clsuters is a step in the right direction, but just the availability of land banks cannot be the only criterion for attracting investments. India needs to offer more in terms of integrated infrastructure like large ports and highways, top quality labor, and sophisticated logistics, all of which are critical factors to meet strict deadlines that international companies operate on.

Jump in Ease of Doing Business

India has jumped 37 positions, in the previous two editions of the Ease of Doing Business, reaching 63rd position. The steep rise in the Ease of Doing Business underscores Indian government commitment towards improving the overall business environment.

India has also overhauled its FDI policies to incentivize international investments in the country. Under Make in India, 25 key industrial sectors have been identified including food processing, automobile, automotive, textile, leather, pharmaceuticals, chemicals, & much more. Dedicated policy impetus and relaxed FDI norms are provided to foster high-speed growth in these sectors. Taking it further, PM Modi has reiterated about making the country Aatm Nirbhar or self-reliant marked by limited reliance on imports.

Strong Signs of Revival Visible in Indian Economy

Strong signs of economic revival are visible in the Indian economy despite business activities taking a beating due to the nationwide lockdown. India registered its first-ever trade surplus in June this year when export marginally inched up by 0.79 billion against imports. Although subdued imports contributed to the surplus, India registered a notable growth in export of various items such as coal, iron ore, cement, steel, pharma products, chemicals, food items & much more. The PMI index has also reached 47.2 in June after marginally dipping in July, indicating restoring of manufacturing activities in the country.

Consolidate its Position

India will continue to consolidate its position on the global map. It is upping its ante by developing large land banks, plug & play rental office spaces, warehouse facilities, & cold chain structures. To further incentivize foreign companies high profile committees to advise, consult, & guide companies, which are contemplating to set-up their manufacturing base in India. The nation is poised to become a key enabler of the global flow of trade and goods.

Authored by Ajay Rakheja- Head 360 Realtors Commercial Vertical