Will India Replicate China For Becoming The International Center For Manufacturing?

The fact that India has missed the opportunity to establish itself as a global center for manufacturing is becoming the point of view of consensus among investors and the universe of large listed companies. It is an opinion that prevails despite the demographic dividend of the seven million people entering the Indian workforce each year.

However, at the maximum highs, Indian markets are pricing in the growth of earnings in adolescents and remain the great story of "growth hope" for investors worldwide. But, in our opinion, real GDP needs to grow more than 8% to meet the expectations of market gains.

We hope that the important manufacturing change outside of China is a trend of several years and a possible golden opportunity for India, especially if it is positioned correctly after the elections. Early evidence of this potential is already emerging. While its future pace and scale remain uncertain, the migration of manufactures outside of China is underway.

Of course, the escalation in trade tensions between the US UU and China is a new and important factor, but even if a trade agreement arises, uncertainty about its soundness is likely to persist. At the same time, rising costs and stricter environmental standards are here to stay.

While rising for nearly 20 years, China's manufacturing center has been under recent pressure with the country's share of global manufacturing exports beginning to fall since 2016. A recent UBS Evidence Lab survey of CFOs in China and North Asia Korea, Taiwan) suggests that many are considering changing manufacturing capabilities outside of China.

The increase in environmental standards and the rising cost of both labor and land are considered among the main drivers of companies that move export production out of China, but the mitigation of the risks of a commercial war in Every rule has also become a key consideration.

The survey showed that India has evolved as one of the preferred destinations to establish a manufacturing base. In addition to the lower costs and the absence of tensions associated with a possible trade war, India is perceived as less burdensome in terms of environmental governance and offers a more qualified workforce relative to its peers. A similar UBS Evidence Lab survey of CFOs in the US UU He found that India has grown in popularity as a destination for FDI in the last two years.

By: Preeti Narula

Content: https://economictimes.indiatimes.com/news/economy/indicators/does-india-have-a-second-chance-to-replicate-china/articleshow/69260673.cms