India must have learnt from Thailand, Vietnam, but it missed US-China trade war opportunity

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Updated: Sep 05, 2019 5:43 PM

India should’ve jumped on the opportunity to lure more global companies to the country as two of the world’s largest economies -- the US and China -- are embroiled in a trade war. Unfortunately, it did not.

Tade war, China, US, Washington, donald trump, Chinese goods, tariff, economy newsTwo of the world’s largest economies — the US and China — are embroiled in a trade war. (Reuters)

India should’ve jumped on the opportunity to lure more global companies to the country as two of the world’s largest economies — the US and China — are embroiled in a trade war. Unfortunately, it did not. Now, Vietnam and Thailand are benefitting from the same, becoming lucrative south-east countries for foreign firms. “South-East Asia is considered one of the areas along with India that should benefit in the medium term for diversification out of the crosshairs of tariffs between the US and China… but this structural trend has to be supported by policies,” Trinh Nguyen, Senior Economist, Emerging Asia, Natixis, told Bloomberg TV in an interview. And the two countries that have supported these policy needs are Vietnam and Thailand. “These two countries stand to benefit from the trade war,” she added.

Vietnam is a lucrative destination for foreign companies, considering its demographics, wages and electricity cost, Bloomberg had quoted Natixis SA data last year. The country was ranked the best among seven emerging Asian countries as manufacturing destinations by Natixis SA. Further, with its labour-intensive policies, liberalised trade policies, Vietnam favours foreign companies. On the other hand, Thailand too is an attractive option, considering easier availability of suppliers and land for setting up shop, Trinh Nguyen said.

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Because of the ongoing trade war, many foreign companies are looking to exit China. Many China-based manufacturers have cut down on their operations and are moving their-supply bases out of the country, according to The Wall Street Journal. 

India, to its credit, relaxed FDI norms recently, opening up a plethora of opportunities for single-brand retailers. Tech giant Apple — one of the most valuable companies in the world — had then said that it looked forward to opening its first shop in India and launching its own website. A few days back, India announced greater flexibility and ease of operation for Single Brand Retail, in order to provide a fillip to the slowing economy. The government’s move is expected to make India a more attractive market for foreign retailers.

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