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India may become the new Home for 200 American Manufacturing Companies wanting to leave China

India may become the new Home for 200 American Manufacturing Companies wanting to leave China

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It’s been nearly a year since President Mukesh Aghi of the USISPF (US-India Strategic and Partnership Forum) announced that 200 US companies are considering a move out of China into India after the 2020 general election.  For those that are searching for a viable alternative to manufacturing base in the Communist nation, this is a tremendous opportunity for these companies.  According to Aghi, these companies have been focused on investing in India since last year.

In an interview with Press Trust of India, Aghi stated that the recommendation made by USISPF would accelerate reforms and create more transparency when critical business decisions must be made.  As a result, US companies are looking at the decision-making process while taking a domestic approach to data localization and e-Commerce rather than a global one.  Aghi also suggested that these reforms need to be accelerated for doing business in India becomes more transparent during the process. He was of the view that Indian companies need to go all out to market their services and ensure streamlining the global supply chain services as these are critical issues. With much needed reforms in this area, it would lead to an increase in employment and job creation.

The need to entice these companies to relocate their manufacturing bases out of China is paramount.  Furthermore, customs and land appropriation issues must be elements of the global supply chain.  As a result, this could create thousands of employment opportunities for India company incorporation.  In addition to the above, former Assistant US Trade Representative for South and Central Asian Affairs, Mark Linscott, is working with USISPF members to develop a recommendation for how the Indian Government can improve its exports.

It would appear that establishing a Free Trade Agreement between the US and India is the next logical step in the process if the US wants to avoid importing the same type of cheap goods that are currently coming out of China.  A Free Trade Agreement will eliminate that concern by creating barriers to Chinese products while gaining access to the Indian market.  At the same time, India would have more access to the US market. 

Most importantly, issues such as a Generalized System of Preferences or GSP would diminish.  A high-level manufacturing council has already been developed among member companies for the purpose detailing what India must do in order to become a manufacturing hub.  As it currently stands, these member companies have invested over $50 billion over the past 4 years.

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