At a virtual meeting of the US-India Strategic Partnership Forum (USISPF) on Thursday night, Prime Minister Narendra Modi made a strong pitch for re-writing the rules for geo-business engagement.
PM Modi did not name China in his address but pitching India as a potential pivot of global supply chain in post-Covid-19 world and emphasising the importance of trust in business, he left little scope for speculation about the bull’s eye he aimed to hit.
China has emerged as the global hub of business in the last 15-20 years not merely on its manufacturing power but majorly due to its role as the linchpin of the supply chain. Global movement of goods and services is heavily dependent on the Chinese systems.
PM Modi pitched India as an alternative in his address. He said the coronavirus pandemic has shown the world that the decision on developing global supply chains should not be based only on cost effectiveness but on trust.
“Along with [cost] affordability, they should also be based on trust. Companies are now looking for reliability and policy stability. India has all of these qualities,” PM Modi said.
There has been a strong anti-China sentiment worldwide not only among the common people but businesses and investors. This is evident from the reports about many multinational giant corporations exploring a China-plus-one option for businesses.
The underlying thinking is to minimise the risk of more disruptions in the future. Some countries such as Japan and the US have spoken about incentivising companies relocating outside China.
Chinese President Xi Jinping himself recently underlined the challenges that China and companies based in the country face in the wake of Covid-19 pandemic. There is a general pushback sentiment against China in America, Europe, Australia and many countries in Asia.
PM Modi said the coronavirus pandemic warrants “a fresh mindset” towards development goals that ought to be human centric and focused on the spirit of cooperation and not manipulation.
Australia and the US have emerged as the most vocal critics of China accusing it of manipulating trade and business situations to its advantage during the coronavirus pandemic.
PM Modi’s message to some of the big investors presenting India as a global destination for investment, business and a potential key player in the global supply chain is unmistakable. He cited recent announcements by MNC giants such as Google and Amazon about their long-term investment plans in India as proof of India’s growing reliability as a business hub.
“Be it America, the Gulf, Europe or Australia, the world believes in us. We have received over $20 billion of foreign investment flows during this year,” PM Modi said. The US, Australia and several countries in Europe have expressed their reservations about business with China.
From being a non-PPE kit manufacturer in pre-Covid-19 period, India has emerged as a major PPE kit exporter in the world. Here a medic takes a break during sample collection for Covid-19 testing in New Delhi. (Photo: PTI)
Among the advantages that India offers to the world of business, PM Modi listed out a transparent and predictable tax regime, a tax system that encourages honest tax-paying practices and a bankruptcy code reducing the risks in the financial system.
He assured that the much discussed lack of labour reforms in India would be addressed suitably. PM Modi said, “Our labour reforms will reduce compliance burden on employers while ensuring social security protection to workers.”
PM Modi’s pitch for India as an alternative to China in becoming the business and supply chain hub of the world did not come in isolation.
Early this week, the trade ministers of three Quad — a grouping of Australia, India, Japan and the US — decided to launch an initiative on building an alternative supply chain network. They said “like-minded” countries would be invited to join the initiative, which aims at countering China’s dominance of global trade and supply chains.
The Quad has become active in recent months and the potential this grouping holds in the Asia-Pacific reason has irked China. Chinese spokespersons have recently taunted India saying it harbours false hope from the grouping.
Establishing itself as a manufacturing hub has been an economic goal of India for years. The Modi government launched the Make In India programme with the same intention. However, red tapism and infrastructural issues have kept investors from actually making India as their base of manufacturing.
However, the Covid-19 pandemic-induced situations may be opening a fresh window of opportunity for India. The pandemic has made China a suspect supplier. On the other hand, India’s openness in relaxing its lockdown norms to allow export of certain items to the countries needing them urgently boosted India’s reliability as a supplier.
India has other advantages over China for being a democratic polity with a free press making accountability easier. China, on the other hand, has made its systems more water-tight under Xi Jinping.
This was seen when China resisted and snubbed global opinion over an inquiry into establishing the origin of the coronavirus pandemic. China has tried to bully every country which asked questions about handling of the Covid-19 situation that turned it into a pandemic within a couple of months of origin.
Global thinkers believe that the coronavirus pandemic will end as a divide-line in the world history much like the World War II. A new geo-politico-economic alignment expected to emerge in post-Covid-19 world, and India may emerge winner. But the country needs to reverse the coronavirus pandemic trend urgently.