‘Firms seek India, but watchful’

1 min read 17 Sep 2023, 11:37 PM IST Mihir Mishra

Companies are concerned over the long-term outlook of the India-China relationship, says Nick Allan, chief executive of Control Risks

Companies considering India as an investment destination are concerned over long-term outlook of the India-China relationship, besides factors such as competitiveness, the Centre-state polity, societal conflicts, short-term infrastructure and skill availability, said Nick Allan, chief executive of risk consultancy firm Control Risks.

This is particularly relevant, considering several American, European, and Japanese companies are exploring India as a key part of their China-plus-one strategy.

“In the long term, you know, people question, where’s India and China’s relationship heading? There’s no question that India is emerging as a competitor in a number of spheres to China. Quite clearly, economically, but also politically. What does it mean? Will it be harder if you have some of your supply chain in China and some of it in India?" said in an interview.

In the short term, clients are concerned about the competitive environment and regulatory reforms. You may understand something about what India’s federal government is planning to do. How does that translate at the state level? And state level issues politically, in certain cases, can have more of an impact than what the federal government does. They’re concerned about infrastructure, absolutely. So, am I going to find the skills, and grow the skills? Will I get government support to grow skills?"

“Queries have increased by about 30% from Europe, the US and Japan. I mean, globally, there is more interest, but our client base is North American, European and Japanese."

Allan said inquiries are not just limited to manufacturing, but also for other sectors. “Post pandemic, we hear quite a lot about China plus one or supply chain resilience," he said.

Companies are increasingly looking at India as a manufacturing base. For instance, Foxconn has started to manufacture phones at facilities in Karnataka, Telangana and Andhra Pradesh. GE HealthCare, Boeing, and Embraer Defence are looking to increase manufacturing in the country.

Economic growth, currency stability and controlled inflation, are working in favour of India when globally it has been challenging. “…And there’s a track record. It’s not just a sort of 12 months, it’s over a number of years. There is political stability, which is expected to continue going forward. India is a democracy, our clients can see that, which is positive."

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