As trade tensions escalate between Washington and Beijing, India is boosting efforts to lure more than 1,000 US businesses out of China, reportedly offering to ease tax and labor laws, and allowing easier access to land.
Among those companies the Indian government reached out to were medical equipment producers, food processing units, and textiles, leather and auto part makers, Bloomberg reported, citing Indian officials. The talks, which began in April and were set up through overseas missions, reportedly involved Medtronic Plc and drug maker Abbott Laboratories, which has recently developed “rapid” coronavirus tests.
To sell the initiative, Indian officials are said to have told the companies that India can provide cheaper labor compared to the US. While the overall costs are still higher than they would be if production remained in China, they promised some perks to sweeten the deal. For example, New Delhi could consider delaying the introduction of a proposed tax on digital transactions that had angered many foreign firms.
The government could also consider specific requests on changes to labor laws, the officials said. India is reportedly working to eliminate another hurdle that was making investors hesitant: its long and complicated land acquisitions. It is currently developing a total area of 461,589 hectares – the size of four Hong Kongs or around a half of the territory of Cyprus – for industrial purposes.
The news comes as the coronavirus outbreak has showed the world how much it has been dependent on China. The US, in particular, is looking for ways to remove its supply chains from the country, which President Donald Trump is accusing of hiding information on the source of the coronavirus. Washington’s renewed attacks on Beijing have already sparked trade war fears – only months after the world’s two biggest economies hammered out a truce in their long-standing tariff row.
While Trump has long advocated the return of US firms to US soil, the new approach is apparently more about just ditching China, rather than bringing American industry home. Officials have recently told Reuters that the White House will not object to US businesses moving to “more friendly” nations, while India was named among those partners the US government is working with to “move the global economy forward.”
According to Secretary of State Mike Pompeo, these discussions include ways to restructure supply chains “to prevent something like this from ever happening again.”
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