New Delhi: India needs to compete against the global ecosystem and create more regulatory stability supporting foreign investments, as American firms look at destinations other than China after Covid-19 to keep supply chains intact, said Nisha Biswal, president of the US-India Business Council (USIBC).
This, Biswal said during an exclusive interaction with ThePrint via Skype, was important for India to emerge as a manufacturing hub for companies which may look at relocating in the aftermath of the pandemic.
“India is a very attractive opportunity. But it is going to have to compete against a global ecosystem…India provides a large market, a large labour and a stable government and can be a very attractive place to locate much of the manufacturing. But India needs to take measures to make itself more competitive as well,” she added.
Biswal, a former assistant secretary of the state for South and Central Asian affairs under the Barack Obama administration, also said while India remains an attractive destination for American firms, the country needs to take adequate measures to be able to position itself as an alternative to China.
She said when global conglomerates make an investment decision in a developing market like India, the only factor that becomes critical is the “need for regulatory stability”.
“India has an incredible stable governance structure, but the policy structure in India tends to be somewhat volatile and the extent to which they can create more long-term regulatory stability I think can really strengthen India’s hand,” she said.
In the world after Covid, Biswal added, supply chains will be moving closer to their markets as global businesses look at diversifying from their traditional approach of single source manufacturing.
“India stands to benefit from that. It is not just an equation of geopolitical consideration…India versus China or any other country, it is really about the economic competition that’s going to be global in nature,” she added.
The USIBC president, however, stressed on the fact that it is “too early to talk about relocation in immediate terms” as companies around the world are still in “crisis mode”.
“We are looking at massive amount of economic disruption, collapse in consumer demand, so many workers on furlough, so many factories have been halted, so now is not necessarily the time where big decisions are going to be made, but now is the time when lot of internal strategising is happening,” she added.
‘China continues to be important’
China continues to be an important market and a key actor in the global supply chains for American companies as well as global businesses, Biswal said.
“China is and will continue to be an important economic actor. It’s going to be an important market and it’s going to be an important source of manufacturing and generator of goods,” she said. “It is really not about closing down China. This is about looking at an overall corporate strategy of not putting all of your eggs in one basket.”
Going forward, Biswal said, companies will aim to see how they can face crises in a cost-efficient manner and from a risk-management perspective.
“Whether it’s trade tension, whether it’s a pandemic, whether it’s a political crisis, whether it’s economic crisis, I think the big learning from this pandemic is the need to de-risk. Perhaps, globalisation 2.0 will be more about regionalisation,” she said.
‘Atma Nirbhar Bharat Abhiyan’ in eyes of American firms
Lauding the Narendra Modi government’s initiative to roll out a Rs 20 lakh crore economic stimulus to fight Covid-19, which is worth 10 per cent of the country’s gross domestic product (GDP), Biswal said it was a “strong package”.
On Modi’s ‘Atma Nirbhar Bharat Abhiyan’ (Self Reliant India Campaign), Biswal said the idea wasn’t about an “isolated India” but a path towards a stronger and resilient economy.
“An India that is isolated is not in India’s interest or in the Indian people’s interest…So I think the prime minister’s focus on self-reliance and resilience should not be taken too far out of context. I certainly don’t take it as a desire to close India off from foreign investment and from global economic ties,” she added.
Also read: Trump announces US will send ventilators to India, collaborate on developing Covid vaccine
Labour migration a concern for US firms
With lakhs of migrant workers moving back from cities to their native places following the pandemic-induced lockdown, American companies are concerned this will lead to disruption in the labour market and supply chains.
“There are concerns about spread of the pandemic, disruption of labour supply and impact on supply chains,” Biswal said.
“In the services sector, India was able to move rapidly and aggressively. India is the services hub for the world and certainly for the US. It can take pride in the fact that so much of its service industry was able to sustain itself without much of a challenge,” she said.
However, Biswal also said the pandemic may make the central as well as state governments look at “new policies” that will require “greater flexibility”.
Trade package after US Presidential elections
On the much-touted US-India trade package, Biswal said both nations should look at a “much more ambitious trade and economic partnership”. Her statement came even as America is focussed on its presidential elections later this year.
“US and India’s trade partnership will be taken up post election and in a more concerted way…After an election, I would urge both governments to sit down and strengthen the US-India corridor and companies within this are able to function,” she said.
India continues to be an attractive market for American firms, she said, as the country represents a stable government with minimal political disruptions.
“If it can address some of the issues on the economic and policy side, then I think India represents a really strong and attractive market for the future,” Biswal added.
Also read: Self-reliant India will automatically be more internationalist: Foreign Secretary Shringla
(The reporter has previously worked with USIBC)
Regulatory bodies acting with the autonomy their charters require would contribute to a more stable policy framework, although the primary responsibility rests with the government itself.
Yes, she is right in stating that at one stroke you can not push out China from the global market. But yes it is a fact that the cos. & Investors is looking elsewhere to shift or having their second unit our side China. India at present has the right atmosphere to use this opportunity but too much of Democracy is killing India in achieving the Economical goal. But a ray of hope is there. Let’s wait and see.
Good Message to the GOI & the opposition as well as, if they really concerned with the bright future of our youngsters & overall economic development of the country.
Thanks
Nagesh Rao
Sooner, than later, India has to stand up to China’s bullying along its border. China also holds its stooge pakistan as a democlean sword over India’s head. India cannot stand petrified in awe of China forever. The problem for India along the border will multiply. China can create problem along every KM of the un-settled border of almost 4000 KM. Nevertheless, this is an inappropriate time to escalate the problems with China, as it would cost India lot in terms of money, not to speak of diplomatic efforts. If the US wants India to stand up to China, it is not enough, if India is treated as a strategic partner. US must also be ready to provide tactical support, as also de-escalate trade releated issues with India.