The Bharatiya Janata Party’s dominance makes India a stable hub for investors, and a favourable base for manufacturers seeking to be less dependent on China. BJP’s dominance is directly related to stability because it ensures policy continuity for a longer period of time, said the Economist Intelligence Unit in its Asia Outlook 2023 report, released this week. India is better placed than its south-east Asian neighbours, due to political uncertainty in Thailand and Indonesia. The world’s biggest democracy has the advantage of a youthful labour market; and a business-friendly environment makes it an attractive investment destination, the EIU report said.
India emerging as alternative to China
India has climbed to 52nd in EIU’s global business environment rankings, from 62nd five years earlier, and now ranks above China. China’s strict covid lockdowns have forced global companies to move some of its manufacturing capacities to other countries including India. Meanwhile, Modi’s Atmanirbhar Bharat campaign has to some degree succeeded in capturing the capacity moving out of China. Apart from the improvement in transport infrastructure, taxes and trade regulation, India’s electronic sector has grown enormously in the last few years due to the support provided by the government through a production-linked incentive scheme.
PLI schemes boost electronics manufacturing in India
Taiwanese tech giant Foxconn, this year, tied up with India’s Vedanta Ltd for manufacturing of semiconductor chips, and both the firms will spend around Rs 1,54,000 crore to set up a plant in the state of Gujarat. “The country’s electronics exports rose by around 50% to US$14bn in 2021 and had already matched that value over the first nine months of 2022. Taiwan’s Foxconn is among the suppliers to Apple (US) to be planning significant expansion in India, as it seeks to diversify its manufacturing capacity beyond China,” the EIU report said.
Investors will get attracted even more towards India in 2023 as it takes charge of the G20. “In 2023 India’s presidency of the G-20, as well as the probable conclusion of bilateral trade agreement negotiations with Australia and the UK, will further help to highlight investment opportunities in the country,” said the report. In the recently concluded state elections, BJP has returned to power in Prime Minister Narendra Modi’s home state Gujarat, with a record number of seats.