'China is world's factory, India can be its office': Kotak Mahindra Bank CEO Uday Kotak

As the world questions China's actions and lack of transparency in view of the COVID-19 pandemic which originated from the country and took the world hostage, other advanced nations are mulling over their large corporations and manufacturing houses exiting China, which has over time come to become the 'world's factory'. One of the most feasible alternatives to China in this regard is India, and there are a multitude of reasons why- a massive working-age population, large number of skilled and English-speaking manpower and others among them.

Amid the ongoing situation and the changing global economic scenario, Uday Kotak, CEO of Kotak Mahindra Bank, has opined, 'if China is the world's factory then India can be its office', with financial analysts. marketers, architects all in the same country at an economical price as compared to the western countries.

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Thousands of companies mulling exit from China

As the world economy has taken a massive blow owing to the deadly Coronavirus pandemic, thousands of foreign companies have been reported to be considering moving their manufacturing base from China to India and others. The companies have been engaged in discussions with Indian authorities at various levels, inputs state. As per a recent report, about 300 of these companies from sectors such as mobiles, electronics, medical devices, textiles and synthetic fabric, are actively pursuing plans of setting up manufacturing in India.

Officials from the government have expressed hope about the possible relocation of the manufacturing units after the COVID-19 crisis is controlled and India will emerge as an alternate manufacturing hub for the world. A majority of the nations such as the US, Japan, South Korea rely on China currently; however, they are contemplating making the switch, with some, such as Japan, even offering their corporations incentives for exiting China.

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However, what remains a challenge for India is matching the production costs with China, given that the production cost difference between India and South-East Asian countries is about 10-12 percent. Nevertheless, the large market size of India still attracts the manufacturers as they can sell their produce domestic market, unlike other countries where the only option is to export owing to small market size in the home country of the manufacturing unit. 

With the Indian government taking several reformative actions to attract foreign investment such as reducing corporate tax and implementation of a single tax structure in the form of GST, India hopes to attract significant foreign investment in the manufacturing sector. The Rs 20 lakh crore Aatmanirbhar package - especially the RBI's measures - to make India self-reliant is also likely to spur demand, as per union minister Piyush Goyal.