Indian policymakers are doubling down on efforts to attract foreign investment as global companies rethink their international supply chains, particularly in China, amid the fallout from the Covid-19 pandemic and ongoing trade tensions.

“State governments in India have started bringing out the red carpet for investors,” said Manoj Gidwani, senior partner at Indian professional services firm Nexdigm.


In Maharashtra, which includes financial capital Mumbai, the state government has unveiled a ‘mega permission system’ to fast track industrial permissions in 24 hours, down from six months.

In Gujarat, one of the country’s main industrial hubs, the state government is offering manufacturing incentives and has identified about 33,000 hectares of land for foreign companies looking to relocate operations from China.

In Karnataka, home to high-tech city Bengaluru, the state has built a 500-acre industrial township for relocating Japanese companies. The development is part of its ‘compete with China’ clusters, said consultancy Dezan Shira & Associates.

“Although it’s going to be very difficult for investors to move completely from China to set up a new manufacturing facility in another country, there is potential for companies to move part of their operations to India to manufacture locally as a way to tap into the market and take advantage of [India’s large consumer base],” Mr Gidwani said.

The Indian government has also re-energised its ‘Make in India’ initiative – which seeks to encourage companies to manufacture products in the country – as multinationals reconsider the location of their global operations.

On April 20, the government announced a new $5.5bn production-linked incentive scheme that will pay manufacturers of mobile phones and other electronic components an incentive of 4-6% on incremental sales of goods manufactured in India, as part of a five-year plan to boost domestic production of electronics.

Overseas outreach

The Delhi government has been actively reaching out to investors to showcase the opportunities of manufacturing in India.

“Many Indian missions abroad are actively promoting the country as a favourable destination for projects and actively supporting FDI into India as part of the ‘Make in India’ campaign,” said Mr Gidwani.

In April, India’s government reached out to about 1,000 US companies offering incentives to relocate manufacturing operations out of China, according to Bloomberg.

A number of multinationals are reportedly considering a move. Apple could relocate about 20% of its production to India from China in a move that would make it the country’s largest exporter, according to The Economic Times newspaper.

The US tech giant has been in talks with the Indian government to produce up to $40bn of iPhones in India over the next five years, according to the report.

“India has always had tremendous potential from a technology standpoint, and it is now introducing incentives which increase its competitiveness with China,” said John Evans, managing director at Tractus Asia, which advises manufacturers looking to set up factories in the region.

“For countries with a focused investment strategy, there is an opportunity to gain investment which would previously go to China. India is doing the right things in a sector which fits its competitive advantages.”