By Prabhat Kumar
After Covid-19, foreign direct investment (FDI) flows into the production sector will be disrupted. As feelings of nationalism grow, investors may be pressured to bring Chinese production back to its home country. Others will possibly look to other China’s gateway havens as a long-term investment strategy. Factors such as trust, intellectual capital and the protection of knowledge, public opinion and security will become vital, among other classic points of profit and growth.
Currently, India’s share of global production is 3%, a figure that could easily rise to 6% in the next 3-4 years, and to 15% by 2030, with the right trade framework in place. China increases its share of global output from 8. 7% in 2004 to 28. 4% in 2018. But after the Covid-19 crisis, their percentage may simply decrease, opening up a new opportunity for India.
As economic hardship is likely to drag on and foreign investors become more cautious, India will want to adopt a three-pronged strategy: roar like a lion, run like a cheetah, and build a nest like a bird. investment in the productive sector would increase investor confidence.
Second, India wants to aggressively advance its “Manufacturing in India” timeline with a sustained marketing crusade to highlight the benefits of its emerging average elegance and consumption patterns. Their number is expected to grow from 40 to 50 million to around 400 to 500 million. by 2030, while intake could increase from $1. 5 trillion to $5. 7 trillion (according to a Bain report).
Third, we will not have to forget that attracting investment is about offering incentives, whether it is Deng Xiaoping’s Open Door Policy in China in 1979 or the corporate tax cut. corporations in Hong Kong or Singapore. Therefore, the government will have to announce a very attractive program that will add tax relief, which will be introduced comprehensively (and not piecemeal). A special program for operational investments would possibly be announced between July and December of this year. The government will have to adapt or offer greater situations than other countries can offer. In the latest round, Chinese companies turned to Vietnam and Bangladesh, which were offered better terms. This time, the opportunity is unlikely to slip through our fingers as it appears that investors are considering Thailand and even Myanmar as imaginable destinations of choice. This can be offset by incentives in the form of tax exemptions. Possibly the importation of capital goods at a zero customs duty rate would be allowed to reduce the cost of initial installation. At the same time, a 25% corporate tax relief for the first 5 to 10 years can also be included in the package. Granting a concession within a constant period would force those involved to make a temporal decision to identify industries.
Fourth, since China’s negative symbol has emerged from a secretive and opaque formula, India’s merit of having a lax democratic formula with a proper mechanism for IPR coverage and a lax judiciary for any dispute settlement will have to be aggressively promoted to build investor confidence and confidence.
The fifth element of the timeline is land acquisition. Renting land, rather than buying it outright, deserves to be the preferred way to create an industry. Many SEZs and commercial areas are inoperative or operating below capacity. Land can be rented through the investor. If there is government land, it can also be leased for 10 years in a row. The concept is to reduce the cost of initial installation.
The sixth factor considers compliance with and enforcement of industry-related central and state regulations. Here, a technique of holding the investor’s hand should be adopted. It is the duty of central governments and states to ensure that the investor is treated well at each and every level and that mandatory facilitation measures are implemented. Then, once the investor declares their goal of establishing a plant, an official of the rank of Co-Secretary of the Center and States will need to be designated as the node. officer to make sure the mission takes off on time. Government actors in the new era will have to play a different role.
Finally, a committee for all investor court cases should be established at the central and state levels to ensure that all court cases are resolved within a specific timeframe.
He is a lawyer specializing in Chinese affairs and foreign investment. In the past he was an assistant professor at IIT Delhi.