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Author: Li Jiahui
SINGAPORE, April 24 (ANI): The Economist Intelligence Unit (EIU) reported earlier this month that India was one of the most improved countries in its quarterly forecast of the best business environment for the next five years. In the EIU Business Environment Ranking (BER), released on April 13, the South Asian country moved up six notches globally, from 14th to 10th out of 17 Asian economies.
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However, the report warns that “intense competition from peer emerging markets, especially in Southeast Asia, will make India’s journey to becoming a major manufacturing power a long one. Excessive red tape and protectionist attitudes will remain challenges for investors”.
The EIU’s BER scores for India show that doing business in the country is getting easier.
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The Economist Group’s research and analysis arm attributed India’s improved performance to “improved scores on foreign trade and exchange controls, infrastructure and technological readiness”.
It added, “India’s highest-scoring category was Market Opportunity, fueled by the large and growing domestic market the country offers, while Political Environment scored the lowest.”
As evidence of this improvement, Bloomberg reported in March that Taiwan’s Foxconn, Apple’s contractor, was looking to boost manufacturing in India. The iPhone maker plans to invest $700 million in a factory near Bengaluru, which could significantly expand production of Apple smartphones in India.
It further claims that Indian officials have said Apple wants to move 25% of its manufacturing there because of concerns about China. Currently, India accounts for about 5% to 7% of Apple’s total component manufacturing output.
The planned 300-acre manufacturing facility near the IT hub city of Bengaluru will make iPhone components and possibly assemble the devices. It will likely employ about 100,000 workers and be about one-third the size of the world’s largest iPhone factory in Zhengzhou, China.
According to Bloomberg, the new factory near Bengaluru could “increase the country’s share of iPhone assembly from less than 5 percent currently to 10-15 percent.”
According to Forbes, JPMorgan Chase estimated last year that Apple will shift 5% of global iPhone 14 manufacturing to India by the end of 2022, and that number will rise to 25% of all iPhone manufacturing by 2025.
Foxconn announced plans earlier this year to build a massive electronics manufacturing plant in Telangana, which would also create 100,000 jobs, but it’s unclear whether the plant will produce Apple products.
As of now, most of the factories of Foxconn, the world’s largest iPhone maker, are in mainland China.
The pivot to India is the result of global geopolitical trends, especially tensions between Beijing and Washington. Additionally, global manufacturers have been re-evaluating their manufacturing supply chains and outsourcing options due to the COVID-19 pandemic and the Russo-Ukraine war. Some are considering “reshoring sourcing” and “manufacturing local” strategies.
Many companies are wary of supply chain overreliance on China, the world’s factory, and are implementing or considering “China plus one” strategies aimed at establishing production across multiple markets.
Apple is reportedly planning to expand its manufacturing operations in India to offset its reliance on Chinese factories. According to reports, Foxconn’s investment in India may be in line with Apple’s goals.
Apple’s business in China was also disrupted by last year’s harsh anti-Covid lockdown in Beijing, one of which sparked protests at Foxconn’s Zhengzhou factory, dubbed “iPhone City,” where nearly all of Apple’s iPhone 14 Pro and The Pro Plus models are all manufactured here. The disruption caused Apple to miss its 2022 iPhone 14 production target by nearly 6 million units.
Apple is by no means the only major global manufacturer betting on India.
In March this year, South Korean electronics giant Samsung announced that it will invest in the establishment of smart manufacturing capabilities at its mobile phone factory in Noida to improve production competitiveness.
Samsung opened a manufacturing R&D center in India in 1996 and currently employs nearly 70,000 people in the country. Noida has the second largest manufacturing facility in the world and Bangalore has the largest R&D center employing nearly 3,500 people. It employs 10,000 people in R&D centers across India.
Samsung estimates that India will have 1 billion smartphone users by 2026, and its 600 million people in the 18-35 age group make it the country with the largest population of millennials and GenZs in the world.
In India, a strong and stable economy, significantly expanded incentive schemes, improved infrastructure and access to a large labor supply form the basis for its attractiveness to investors. Additionally, policy reforms have made it easier to do business in India.
Major improvements in areas such as education, better labor force participation, infrastructure, taxation and trade regulation will further boost investment, according to the EIU researchers.
The EIU report concludes: “India’s growing viability as a manufacturing investment destination is evident. Positive government incentives for manufacturing, steady improvements in infrastructure, low-cost labor availability and bilateral trade agreements are driving improvements in the business environment.” Gradual improvement. Broader geopolitical factors and the search for alternatives to China will also encourage investors to focus on India.
The country has a golden opportunity to stimulate its manufacturing sector, which accounts for less than 20% of its GDP…to drive economic growth and exports. ”
However, India will face stiff competition in attracting investment from Southeast Asian countries, it added. (Arnie)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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