India Inc CEO Survey: 53% believe India will soon become a competitive manufacturing hub

To make India the single-largest alternative to China, the top priority should be to boost economic growth.

The China-plus-one concept has gained traction of late as companies look to reduce their dependence on Beijing for their manufacturing and software needs. India, with its large, young population and growing infrastructure, is seen as a beneficiary of this shift. Per a Moneycontrol survey of Chief Executive Officers (CEOs), nearly 53 percent believe the country will soon become an alternative to China as a manufacturing destination.

Meanwhile, 24.5 percent were of the view that India is “absolutely” well-positioned to be an alternative to Beijing, and about 21 percent believe that India is not yet ready to take up this mantle.

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India Inc CEO Survey

In October 2023, India’s Chief Economic Advisor, V Anantha Nageswaran, had written in an article that with the West increasingly looking towards India to friend-shore its supply chains, New Delhi must double down on its efforts to encourage foreign companies to make in India by leveraging its advantages — a large domestic market, macroeconomic stability, and policy consistency.

The China-plus-one strategy has primarily been adopted by Western nations that are encouraging their companies to minimise supply-chain dependency on China by diversifying the countries they source parts from.

Global giants, including Tesla, are said to be betting on India becoming a key manufacturing hub. Such companies have been exploring opportunities to set up factories in India, as then they can also take advantage of the country’s growing domestic market.

Case in point is Apple Inc., whose new plant in Tamil Nadu began producing the latest iPhone 15 in September 2023. Besides being consumed in India, the phone is also exported. Denmark-based Vestas, the world’s largest wind turbine manufacturer, will also be opening two new plants in India.

Tax matters

India Inc CEO Survey

If India is to lure global investment and become a competitive manufacturing market,  its tax rates need to be more attractive. According to 35.8 percent of the  CEOs polled, there is room for improvement in the country’s duty structure. These respondents are of the view that India’s tax rates are “somewhat attractive” and “moderately competitive,” whereas 34 percent believe that duty structures are conducive enough to bring in significant global investment.

However, 22.6 percent feel that the tax rates are not competitive enough to attract substantial global investment.

India Inc CEO Survey

Some of the CEOs in an open-ended response said that to make India the single-largest alternative to China, the top priority should be to boost economic growth.