Global Manufacturing Firms to Move Operations from China to India: Survey

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Industry Outlook Team | Tuesday, 29 December 2020

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In a survey done by FICCI and Dhruva Advisors, 69 percent companies have said that a considerable part of global manufacturing is likely to shift from China to India. The survey covered more than 150 companies in India, majority of whom expect the global companies to move out from China to India.

On the other hand, a little more than half of the companies said that there is no impact on the finance costs post-implementation of the stimulus package. They also called Prime Minister Narendra Modi’s Atmanirbhar Bharat Package 3.0 as “average”.

The package contained incentives for employment generation, the extension of ECLGS till March 2021, guaranteed credit for supporting stressed sectors, the extension of the PLI scheme to new sectors, etc.

The report has underscored the fact that weak demand, managing costs, the shortfall in financial liquidity are still the key challenges faced by the companies due to the current uncertain economic environment. Post-implementation of the stimulus package, most of the companies said that their finance costs had no impact. However, the number of companies saying that they have adequate credit facilities from banks has increased in December. Also, with local lockdowns, companies said that they are facing a moderate impact on their businesses.

When asked about the impact of travel restrictions, three-fourth of the companies said that it significantly impacted their ability to undertake business operations efficiently and effectively. However, even as the travel restrictions are over, the companies expect a mix of travel and virtual meetings. They expect that there will be a significant impact on business from the availability of the Covid-19 vaccine.

Around 35 per cent of the companies believe that their businesses will return to normal growth in 6 months after the availability of the vaccine, followed by 29 per cent who believe that it would take 12 months to return to normalcy. Meanwhile, 62 per cent of the companies also expect a reduction in tax rates in the upcoming Budget 2021.