New Delhi, Sep 24 (IANS) In December 2023, the Chinese government banned the use of iPhones for its employees and firms. After which there has been an increase in uneasiness among American companies working in China in the last few years.
A few days ago, iPhone manufacturing company Apple was reducing the production of its phones in China and was looking for space in many countries including India. After this, Apple set up its iPhone manufacturing factory in India. All this did not happen just like that. Actually, this was one of the reasons for the ‘trade war’ going on between America and China for the last several years.
The ‘trade war’ between the US and China started with the victory of Donald Trump in the US presidential election in 2016. Trump believed that China takes technology and money from the US and sells goods to the US and earns money, but it also challenges America’s image as a global boss on the basis of this technology and money. A few days after becoming the President, Trump imposed a separate 10 percent duty on more than 6000 Chinese products, whose import value was more than $200 billion. In response, China also imposed the same duty on American products.
From here the ‘trade war’ started between the two countries. With the start of this ‘trade war’, American companies which were providing production and services on a large scale in China started facing problems. After this, many American companies started trying to find an alternative to China for cheap labor and production. According to a report, the proposal to impose 100 percent duty on EV vehicles made in China, 50 percent on semiconductors and solar cells and 25 percent on lithium-ion batteries has been postponed twice this year in the US. American companies started exploring possibilities for production in every country like India, Vietnam, Taiwan, where cheap labor and services could be available in a stable political environment.
Amidst this rush of American companies, the Government of India launched the Production Linked Incentive (PLI) scheme in 2020 to attract foreign investors. Under the PLI scheme, the government wanted to promote domestic manufacturing in India. This is done to provide benefits and financial incentives to companies that agree to invest in the country. After this move of the Government of India, many companies of the world including America started investing in India, which were withdrawing their investments in China due to ‘trade war’, expensive labor, aging population or any other reason. The biggest example of this is South Korean mobile manufacturer Samsung and American mobile manufacturer Apple. Both these companies brought their largest production units to India. According to a report, an investment of Rs 1.03 trillion has been made in India till November 2023, while exports have crossed Rs 3.20 trillion since the implementation of the scheme.
According to a report by the US Chamber of Commerce, around 50 companies providing manufacturing and services in China want to leave the country due to costly labour, aging population and rising unemployment in China or some other reason. About 40% of these companies, i.e. 15 companies, are the most preferred place for investment in India.
According to Shanghai’s AmCham, due to the trend of American companies moving to other countries, US foreign investment in China fell by 14 percent to $163 billion in 2023. Companies wishing to leave China have invested about Rs 12 lakh crore in China. According to the report of the US Chamber of Commerce, 306 companies were included in their survey.
This report also claims that due to the increasing ease of doing business in India, investors are now preferring to invest in India more than Mexico, America and Europe. In this report prepared on the choice of investors, India was at number 5 last year. Whereas this year India has come to number two in this report. In this, the countries of South East Asia come first. Among these, countries like Indonesia, Singapore and Malaysia are the first choice of companies investing.
However, the report also states that management consulting companies are very fond of India’s investment conditions. In 2023, about 40 percent of American companies were planning to invest heavily in China. But now these companies want to invest in India. 54 percent of companies in the management consulting sector have expressed their desire to invest in India. Apart from this, many companies in the garment and manufacturing sector have also shown interest in investing in India.
–IANS
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