Moving out of China? India among best alternatives
WAREHOUSING & LOGISTICS

Moving out of China? India among best alternatives

With China finding itself falling out of favour among international players, India should be their destination of choice, writes Pratap Padode.

_______

India is the second topmost domestic logistics market and the second topmost international logistics opportunity as per the Agility Emerging Markets Logistics Index Report 2021. The pandemic has had a cataclysmic impact on the logistics industry with 60% of the logistics executives admitting that the pandemic has resulted in permanent changes in the way their businesses operate globally or regionally. India's pandemic curve was not flattering to begin with and while the economic curve flattened, the pandemic curve had surged. After a GDP contraction of 23.9% in the first quarter followed by a successive contraction of 7.5%, India had hit an official recession. However, the narrative changed from the third quarter and the economy began to show resilience. The report cites that "activity in retail locations while still down by 25% compared to pre-pandemic levels in Q3 2020, has shown continuous improvement according to Google mobility data as also reflected in the improved demand scenario for the manufacturing and industrial sectors with the purchase of consumer durables and two- and four-wheeled vehicles rising sharply over the second half of 2020."

With 47% of those surveyed confirming that they will continue to invest but only in markets with favourable trade conditions, India becomes an attractive market especially in view of its recently launched productivity linked incentives (PLI) schemes which favour foreign direct investment. The report cites India as the second most potential to be a logistics hub in the next five years. The report names companies like Wistron, Foxconn, Pegatron--all manufacturers for Apple along with Salcomp (world's largest manufacturer of cell phone chargers)--seeking to expand their Indian operations to take advantage of the government's PLI scheme which provides as much as $6 billion over five years in subsidies for Indian-made cell phones and accessories. At least 20 electronics manufacturers have expressed interest following the announcement of the scheme, which may be extended to other consumer electronics products. 

China continues to occupy the first position in all the above where India has figured as the second topmost and yet when the question was raised as to which would be the favoured destination if logistics executives had to pull out their operations from China, India was their second choice

after Vietnam followed by Indonesia with Malaysia and Thailand being equally favoured at the fourth position. Interestingly, the Gulf countries like the UAE, Saudi Arabia, Qatar, Bahrain and Oman figured in the top 10 among the ones offering the most stable business climates among emerging markets.

About PLI scheme 

The PLI scheme for large-scale electronics manufacturing notified on 1 April  2020, extends an incentive of 4-6% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20). In November, the government announced a mega PLI scheme for 10 sectors, including advanced chemistry cell battery, electronic products, automobiles and auto components, pharma, telecom and networking products, textile, food products, white goods and speciality steel.


Author: Pratap Padode is Editor-in-Chief, Construction World, & Founder, FIRST Construction Council.

With China finding itself falling out of favour among international players, India should be their destination of choice, writes Pratap Padode._______India is the second topmost domestic logistics market and the second topmost international logistics opportunity as per the Agility Emerging Markets Logistics Index Report 2021. The pandemic has had a cataclysmic impact on the logistics industry with 60% of the logistics executives admitting that the pandemic has resulted in permanent changes in the way their businesses operate globally or regionally. India's pandemic curve was not flattering to begin with and while the economic curve flattened, the pandemic curve had surged. After a GDP contraction of 23.9% in the first quarter followed by a successive contraction of 7.5%, India had hit an official recession. However, the narrative changed from the third quarter and the economy began to show resilience. The report cites that activity in retail locations while still down by 25% compared to pre-pandemic levels in Q3 2020, has shown continuous improvement according to Google mobility data as also reflected in the improved demand scenario for the manufacturing and industrial sectors with the purchase of consumer durables and two- and four-wheeled vehicles rising sharply over the second half of 2020.With 47% of those surveyed confirming that they will continue to invest but only in markets with favourable trade conditions, India becomes an attractive market especially in view of its recently launched productivity linked incentives (PLI) schemes which favour foreign direct investment. The report cites India as the second most potential to be a logistics hub in the next five years. The report names companies like Wistron, Foxconn, Pegatron--all manufacturers for Apple along with Salcomp (world's largest manufacturer of cell phone chargers)--seeking to expand their Indian operations to take advantage of the government's PLI scheme which provides as much as $6 billion over five years in subsidies for Indian-made cell phones and accessories. At least 20 electronics manufacturers have expressed interest following the announcement of the scheme, which may be extended to other consumer electronics products. China continues to occupy the first position in all the above where India has figured as the second topmost and yet when the question was raised as to which would be the favoured destination if logistics executives had to pull out their operations from China, India was their second choiceafter Vietnam followed by Indonesia with Malaysia and Thailand being equally favoured at the fourth position. Interestingly, the Gulf countries like the UAE, Saudi Arabia, Qatar, Bahrain and Oman figured in the top 10 among the ones offering the most stable business climates among emerging markets.About PLI scheme The PLI scheme for large-scale electronics manufacturing notified on 1 April  2020, extends an incentive of 4-6% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20). In November, the government announced a mega PLI scheme for 10 sectors, including advanced chemistry cell battery, electronic products, automobiles and auto components, pharma, telecom and networking products, textile, food products, white goods and speciality steel.Author: Pratap Padode is Editor-in-Chief, Construction World, & Founder, FIRST Construction Council.

Next Story
Infrastructure Energy

KEC Secures Rs 10, 380 Mn Substation Order in Saudi Arabia

KEC International Ltd., a global infrastructure EPC major, and an RPG Group company, has secured a new order worth Rs 10,380 million for the Design, Supply and Installation of a 380 kV GIS Substation in Saudi Arabia.Vimal Kejriwal, MD & CEO, KEC International Ltd., commented, “We are delighted with the successive order wins in our T&D business. In a landmark achievement, we have secured our largest ever substation order. This prestigious order in the Middle East has widened our portfolio and strengthened our presence in the region. With this strategic win, our year-to-date or..

Next Story
Infrastructure Urban

Central Bank of India executes first fully digital SCF deal on PSB Xchange

In a major advancement for India’s banking sector, Central Bank of India (CBI) has successfully completed the country’s first fully digital supply chain finance (SCF) transaction on PSB Xchange—a unified multi-lender platform launched by PSB Alliance. PSB Xchange is designed to connect public and private sector banks, NBFCs, and fintechs with corporates and their channel partners to facilitate supply chain finance and small business loans. The transaction marks the first time a fintech-originated corporate lead has been seamlessly processed through the PSB Xchange ecosystem. The lead fl..

Next Story
Infrastructure Energy

Atlanta Electricals secures Rs 1,835 Mn transformer order from BNC Power

Atlanta Electricals Limited (“Atlanta”) has secured an order worth Rs 1,835 million from BNC Power Projects Ltd for the supply of extra high voltage (EHV) transformers and a bus reactor for its Pugal site. The contract includes a mix of 315 MVA, 400 KV and 100 MVA, 132 KV transformers along with a 400 KV bus reactor. The project scope encompasses design, manufacturing, testing, and supply to the project site. Deliveries will be sequenced following engineering and drawing approvals, offering multi-quarter execution visibility and ensuring a steady production run-rate. The order will be ex..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?