by Chirag Agarwal
The Indian government’s bold decision to boycott Chinese products holds far-reaching implications for its vast population. Since a lot of Indian consumers are supporting the Make in India project - which is designed to improve skill development, foster innovation, and build the world’s best manufacturing infrastructure in India - this adherence to the decision of banning Chinese products caused many foreign investors to spend billions of dollars on settling their manufacturing sectors in India.
Additionally, Trump’s order to US-based firms to shift their manufacturing sectors from China, as well as increased tariffs on Chinese goods, have provoked US-based firms to move their factories away from China.
Renowned companies such as Apple, Google, Facebook, and Amazon have invested a total of 17 billion dollars. Their investment in India in the midst of a global pandemic has astonished people - yet it will open prosperous opportunities for the people in terms of the job market.
Google has reserved its investment for India in the Google for India Digitization Fund. This fund is intended for the use of a more diverse range of local languages on the Internet, using AI to boost social sectors such as health, medicare, and water supply, and business empowerment through allowing businesses to establish their presence digitally.
Facebook also announced its partnership with the Central Board of Secondary Education (CBSE) to teach the young generation of internet-users about digital safety, internet privacy, and maintaining proper mental health.
Apple is also investing in India through Foxconn, a Taiwan-based multinational tech contractor manufacturer. It is the world's largest provider of electronics and the third-largest tech company by revenue. Foxconn manufactures all the devices of Apple and has decided to invest almost $1 billion in southern India for the manufacturing of devices. Currently, the estimated value of Apple’s investment in India is approximately half a billion dollars. This investment will generate approximately 6,000 jobs.
This is an immense opportunity for India in terms of employment. India has faced constant hurdles in creating jobs for its citizens. The labor in India is even cheaper than in China, and the gradual expansion of its supplier base will assist Indian Apple plants to act as an export hub of their products.
Apple’s support should benefit India’s economy through increased employment rates and by generating revenue for India through exporting these goods to foreign countries. Moreover, it will encourage more foreign investors to invest in India.
Reasons Why US-based Firms are Investing in India
India has made thousands of hectares (485,671) of land available just for other firms to settle their manufacturing sector. That size of land itself surpasses the size of Luxembourg. Several US-based tech firms that had their manufacturing sectors in China have used this opportunity to invest and settle their manufacturing sectors in India.
Around 54 percent of the Indian population has access to the Internet, which means that there are over 700 million internet users in India. This is a huge boon for the tech industry, especially when there is a large number of the youth population who are more inclined towards digitization. More internet users, more ads, and more revenue boost.
The biggest challenge for US-based firms
However, for US-based firms to flourish in India might be harder than anticipated, especially when there are businesses such as Jio, a company owned and founded by the richest person in Asia, Mukesh Ambani.
Jio is under Reliance Industries, an Indian conglomerate. Reliance has also partnered with the Government of India, which gives them an advantage while commercializing their products in the Indian market.
Jio has also employed the use of effective marketing strategies - for example, it is heavily involved in sponsoring cricket teams and leagues (such as the Indian Premier League), hence appealing to the masses of Indians who follow their most popular sport.
India’s domestic electronic production revenue just substitutes 3.3 percent of the economy. But the estimated growth was more than Rs 4 trillion. The only reason for that is there is a huge supply gap to fill and the Indian market relies on imports from China.
The GDP of India didn’t increase because most of the electronics which are bought by Indian users such as Xiaomi and Redmi are manufactured in China and that increases the GDP of China rather than India. More manufacturing sectors settling in India will definitely increase India’s domestic product rather than benefiting other countries for export.
India is off to a great start in terms of economy and is awaiting for other investments that will support the Make In India program. With companies shifting their manufacturing factories from China to India, India can foresee a huge boost in revenue and hopefully meet their criteria of reaching the 5 trillion economies in 2025 by increasing the rate of exporting goods and through the 8 percent increase in the Indian economy every year.