Why are American companies fleeing from China, is this the right time to promote investment in India?

Investment in India: After the American companies gradually turning their backs on China, this is no less than an opportunity for India. This is the right time for India to attract investment from companies that are moving away from China.

Opportunity For India: In December 2023, the Chinese government banned the use of iPhones for its employees and firms. After which the American companies working in China for the last few years became restless. iPhone manufacturing company Apple was looking for a place in many countries including India by reducing the production of its phones in China a few days ago. After this, Apple set up an iPhone factory in India. All this did not happen just like that, it happened due to the 'trade war' going on between America and China for the last few years.

How did the 'trade war' start?

Donald Trump's victory in the 2016 US presidential election started the 'trade war' between the US and China. Trump believed that China takes technology and money from the US and sells goods to the US and earns money. It challenges America's image as a global boss on the basis of this technology and money. A few days after becoming president, Trump imposed a separate 10 percent duty on more than 6000 Chinese products whose import value was more than $200 billion. In response, China also imposed the same duty on American products.

American companies started facing problems.

This is where the 'trade war' started between the two countries. With the start of the 'trade war', American companies producing and providing services in China started facing problems. After this, many American companies started looking for the option of China for cheap labor and production. According to a report, the proposal to impose 100 percent duty on EV vehicles made in China, 50 percent on semiconductors and solar cells and 25 percent on lithium-oil batteries has been postponed twice this year in the US. American companies started exploring possibilities for production in countries like India, Vietnam, Taiwan.

Scheme launched to promote manufacturing

Amidst this rush of American companies, the Government of India launched the Production Linked Incentive (PLI) scheme in 2020 to attract foreign investors. Under PLI, the government wanted to promote domestic manufacturing in India. This is done to provide benefits and financial incentives to companies that agree to invest in the country. After the move of the Indian government, many companies of the world including America started investing in India. This includes especially those companies which were withdrawing their investments in China due to 'trade war', expensive labor, aging population or any other reason.

Samsung and Apple are the biggest examples of this

. South Korea's Samsung and American mobile manufacturer Apple are big examples of this. Both companies brought their largest production units to India. According to a report, an investment of Rs 1.03 trillion has been made in India by November 2023, while exports have crossed Rs 3.20 trillion since the implementation of the scheme. According to the US Chamber of Commerce report, due to expensive labor in China, aging population and rising unemployment in China, 50 companies providing production and services in China want to leave the country. About 40 percent of these companies are choosing India for investment.

Foreign investment fell 14 percent to $163 billion in 2023

According to Shanghai's AmCham, due to the trend of American companies moving to another country, US foreign investment in China fell 14 percent to $163 billion in 2023. Companies wishing to leave China have invested Rs 12 lakh crore in China. According to the report of the US Chamber of Commerce, 306 companies were included in their survey. This report also claimed that due to the increasing ease of doing business in India, investors are preferring to invest in India as compared to Mexico, America and Europe.