Is China Productive? Is India Productive? (Article 3)

Article 3

India’s position:

China's weakened global position is a "blessing in disguise" for India to attract more investment, Indian Transport Minister Nitin Gadkari said in a recent interview.

Yes, indeed it is a blessing in disguise. Indian private sector has already started working on it and the recent Reliance Jio partnerships and the investments that it got from FAANG (An acronym for Facebook, Amazon, Apple, Netflix; and Google) group companies. Foxconn is planning to invest $1 billion in India amid Apple's gradual production shift from China (Source: ET Now Digital)

The way ahead:

Walking on the Great China Wall

But there is much more to walk. It seems, the Indian central and state governments have realised it. The northern state of Uttar Pradesh, which has a population the size of Brazil, is already forming an economic task force to attract firms keen to ditch China. (Source: BBC).

India is also readying a pool of land twice the size of Luxembourg to offer companies that want to move manufacturing out of China, and has reached out to 1,000 American multinationals (Source: Bloomberg).

The Indian MSMEs are also gearing up to meet the new opportunities and challenges. Although it is taking a little more time to deliver, the government has definitely taken steps to help this sector (more on https://msme.gov.in/latest-events).

What has Indian government done so far?

Out of the 15 relief measures announced by the Finance Minister Nirmal Sitharaman on Wednesday under the mega Rs 20 lakh crore (Approx. 266 Billion USD) stimulus package for the Covid-battered economy, six aimed at bringing lockdown-hit India’s vast MSME sector back to life. (read more on https://www.financialexpress.com/industry/sme/msme-fin-finance-minister-nirmala-sithraman-6-relief-measures-for-msmes-small-businesses-to-survive-covid-19/1958150/)

The definition of MSME has been made more inclusive by increasing the limit of their investments and turnover.

Addressing MSMEs’ issue of unfair competition from foreign companies in government procurement tenders, the government will not allow global tenders in such schemes up to Rs 200 crore (Approx. USD 26.7 M) (Source: Financial Express)

What MSMEs need to do?

There are efforts to attract supply chains, both at central and state government level. A lot is happening. It is up to MSMEs to react now. Funds are available. Schemes are in place. There have been concessions given in filing GST, Corporate Tax, Income Tax etc. It is understood that MSMEs still have problems, but let us appreciate that Government also is facing lots of problems both internal and external. It is still delivering in these constraints.

We need to keep in mind that there will always be a difference between India and China government because of their style of operation. India being a democratic country, there are good chances of people expressing themselves & the government taking course correction. It is quite possible that people of China would realize the problems associated with communist government and its style of functioning. So far, since last few decades, situation was in government’s favour, as the people saw growth coming up all the time. Not now!

Perhaps that is why the China government might be looking aggressive to the world, but I feel they are scared within.

Coming back to India and its MSMEs, its not the time to complain – it is time to gear up & deliver. That is the only way the world will listen to us & invest in us. For a MSME owner, maybe a good mentor would be necessary to steer his/her industry through this situation.

© Nitin Kirloskar