Shreya Charaya (MBA 2019)
“The virus didn't break the
system; it exposed a broken system”
The outbreak in China led to the halt of business operations of all the multinational
companies. Companies across the world are planning to shift their operations
from China as it is considered as an epicentre of the Novel Corona virus. While
many countries believe that the virus is a “man-made” virus developed in the
labs of China, the exact cause behind the spread of the virus is still unknown.
The companies are therefore looking for an exit plan from China and exploring
possibilities of entering other nations.
In the recent weeks US-China trade war has aggravated with Donald Trump worsening his anger against the China’s government holding them responsible for the pandemic and the economic downturn. A bill was proposed in US to facilitate the American companies to relocate their bases from China. The government will bear all the expenses of moving the bases outside China if the bill is passed. Whereas last month Japan declared that it would set aside $2.2 billion as an economic stimulus program to help its firms move their manufacturing units out of China. The program guarantees assistance to businesses even though they transfer their production bases to other nations [1].
The shift in these operations brings numerous opportunities for India. The manufacturers around the globe have entered into talks with Indian companies to discuss the prospect of moving part of their supply chains from China as they aim to diversify their operations following the outbreak of Covid-19. With these interests of the companies around the globe India may look forward to the achieve the success of “Make in India” campaign. In April the government introduced three motivating plans including a luring incentive of around Rs 48,000 crore to support manufactures of electronics and generate 20 lakh employments by the year 2025. The Prime Minister of India has demanded the state ministers to look out for enticing investments from companies leaving China and they should have prepared schemes to bring in those firms at state level. A few diversification of operations have already made its way to India where Lava International promises to invest ₹800 crore in the next five years to expand its business [2]. Another opportunity for India that that came up in the past few days is the shift of entire operations of a German footwear brand “Von Wellx” in the state of Uttar Pradesh bringing a huge production capacity of over three million pairs with a preliminary venture capital of ₹110 crore [3].
In the recent weeks US-China trade war has aggravated with Donald Trump worsening his anger against the China’s government holding them responsible for the pandemic and the economic downturn. A bill was proposed in US to facilitate the American companies to relocate their bases from China. The government will bear all the expenses of moving the bases outside China if the bill is passed. Whereas last month Japan declared that it would set aside $2.2 billion as an economic stimulus program to help its firms move their manufacturing units out of China. The program guarantees assistance to businesses even though they transfer their production bases to other nations [1].
The shift in these operations brings numerous opportunities for India. The manufacturers around the globe have entered into talks with Indian companies to discuss the prospect of moving part of their supply chains from China as they aim to diversify their operations following the outbreak of Covid-19. With these interests of the companies around the globe India may look forward to the achieve the success of “Make in India” campaign. In April the government introduced three motivating plans including a luring incentive of around Rs 48,000 crore to support manufactures of electronics and generate 20 lakh employments by the year 2025. The Prime Minister of India has demanded the state ministers to look out for enticing investments from companies leaving China and they should have prepared schemes to bring in those firms at state level. A few diversification of operations have already made its way to India where Lava International promises to invest ₹800 crore in the next five years to expand its business [2]. Another opportunity for India that that came up in the past few days is the shift of entire operations of a German footwear brand “Von Wellx” in the state of Uttar Pradesh bringing a huge production capacity of over three million pairs with a preliminary venture capital of ₹110 crore [3].
Though the Indian economy will
suffer in the FY 2020 because of the lockdown situation to fight the Covid-19
but the fiscal policies should mitigate the economic crisis allowing
strengthened and easy supply of financial resources to industrial sector and entrepreneurs
in order to foster economic progress. The pandemic recovery is somehow possible
as long as the government is able to balance the growth of second quarter of
2020 by offering benefits and opportunities to the international investors that
support their business schemes in India. Thus, a modern way of operating,
communicating and exchanging information is expected to rise.
References
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[1] P. K.
Dutta, “Covid-19: Firms explore a non-China address. Can India give them a
pin code?,” India Today, 19 May 2020.
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[2] PTI,
“Lava to shift operations from China to India, invest Rs 800 crore in 5
years,” Financial Express, 15 May 2020.
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[3] PTI, “German footwear maker to shift production to Uttar Pradesh from
China,” Business Standard, 19 May 2020.
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