NEW DELHI: India will be banking on selling its 14 newly carved out coastal economic zones in Tamil Nadu, Gujarat, Maharashtra and Kerala among other places, besides tweaking Special Economic Zone (SEZ) policies and offering tax breaks, duty-free equipment imports and single day registrations to attract investment from foreign companies.
Commerce Ministry officials said they were recommending these measures and some of them could find their way into this year’s budget, while others would come by way of changes in law and as part of the Export-Import Policy.
These measures would target all FDI investments, especially companies shifting their manufacturing bases out of China as a result of its ongoing trade war with the US.
US President Donald Trump has announced a hefty 25 per cent duty on imports from China worth about $250 billion, forcing manufacturers to consider shifting out. Chinese labour wages have also risen making production of many goods uneconomical.
In a recent poll conducted by the American Chamber of Commerce, about 40 per cent of the 239 surveyed firms said they were considering relocating some or all of their manufacturing facilities outside of China.
However, India has stiff competition from Latin American countries, Vietnam, Bangladesh and other ASEAN nations.
“India has been working on this strategy for sometime. Mainly, these will be Japanese and Korean firms which may come here. But, a study of our competitors in the FDI game shows that we need to overhaul many of our policies to attract them,” said Professor Biswajit Dhar of JNU, a trade expert.
“Where we score is political stability, the presence of a large pool of skilled labour, use of English as the language of commerce and governance and, above all, the size of the domestic market itself. now slated to become a $3 trillion economy… where some others score over us are labour costs and ease of doing business. However, we will be taking a large number of steps to make things easy for firms relocating to India,” said officials.
Commerce ministry officials believe they can attract companies in the electronics, telecommunications, electrical equipment and chemicals sectors (which account for a large chunk of India’s import bill).