Investing in "Made in India", gold everywhere?

There is no doubt that India has developed into one of the fastest growing economies in the world. Its high-quality geographical conditions, abundant labor resources, and low political risks have attracted the attention of global capital. It is expected that by 2018, India will become the second largest manufacturing country in the world after China. The development "entanglement" between Made in India and Made in China has also been closely watched by people in the world economy from time to time. So, what is the investment environment for Indian manufacturing? What should I pay attention to when I want to invest in India?

What makes "Made in India"?

Samir N Patel is the founder of Amos Enterprise Ltd. (AEL), a trading company based in Ahmedabad, Gujarat, India. Provide various raw materials for industrial production. The high-quality location has allowed it to grow rapidly in the past 22 years. When the founder Samir talked about the manufacturing environment in India, he first mentioned the attractive labor resources in India. At present, the under-35 population in India accounts for 65% of the total population. In the next 15 to 20 years, this young group will not only serve as a solid foundation to promote the vigorous development of the manufacturing industry, but also will be the foundation of India's The guarantee that domestic consumer demand can expand.

Under the conditions of cost advantages and sufficient labor resources, a series of policy supports from the Indian government not only help the development of the original manufacturing industry, but more importantly, the preferential policies have attracted overseas investors from all over the world. invest. Although India has consistently ranked among the top ten destinations for foreign investment, changes in India's domestic regulatory environment have slowed the pace of foreign investment entering India since 1991. Since the beginning of the new century, the Indian government has intensified its support policies for key cities. In terms of funding, the Technology Upgrading and Revision Fund provides subsidies for the production, processing, and import of production machines. In terms of human resources, the Comprehensive Technology Development Project is a pilot project started in October 2010, aiming to solve the problem of skilled labor. Shortages, the project covers twelve specific programs to provide training and teaching to 1.5 million people. In addition, the government has launched plans to build large parks, which will improve the lack of infrastructure in the country. At present, there are still 44 large-scale projects in the planning, once officially launched, it will bring a very considerable number of employment opportunities, and will attract 300 billion rupees of investment from overseas.

The above-mentioned government strategy is to simplify the restrictions on foreign direct investment. The foreign direct investment policy aims to facilitate the entry of overseas capital and promote the cooperation between local Indian enterprises and foreign businessmen to seek common development. In addition to the government, local Indian companies with considerable scale have also joined in the process of accelerating the connection between India and the world. The Indian entrepreneur Samir mentioned above has established a charitable trust fund based on his own company AEL, which not only helps and Cultivate local youth to learn technology and enter enterprises, and also provide special "one-to-one" support to a village 50 kilometers away from the city of Ahmedabad to help them export products and labor.

Made in India PK Made in China?

Made in India is often compared with Made in China, especially for China, the term "Made in India" is always mixed with some complicated emotions. Is Made in India replicating the development model of Made in China? Has Made in India surpassed Made in China? For the pace of development of the Indian manufacturing industry, different stages have different development characteristics. Samir, an Indian entrepreneur, also shared his views on this issue. He believes that at some stage, the development speed of India's manufacturing industry has already kept up with the development speed and pace of China. Nowadays, more and more Chinese companies have also started to invest in India. When Chinese companies come to India to seek cooperation, it is natural to match all aspects of the company with India's national conditions and social customs. Such a close cooperative relationship cannot be judged simply by "transcending or not".

In addition, it is worth mentioning the small and medium-sized enterprise group in India. They embrace the dream of starting a business. Compared with the Chinese market, the more favorable labor market environment in Indian society provides them with better conditions for development. Small, medium and micro enterprises have played a very important role in the development of India's manufacturing industry. They have practical development goals and provide a large number of employment opportunities for the society. This is why the Indian government fully supports the development of small and medium enterprises. In fact, SMEs are the backbone of India's manufacturing industry. Looking at the large number of Sino-Indian joint ventures in India, this good and ideal development environment, supplemented by policy assistance, is a win-win situation for Indian and Chinese companies.

Different from the content reflected in the macro perspective, when focusing on the specific textile and apparel industry, the competitive relationship between Made in India and Made in China is more complicated.

Both China and India are the world's largest labor resource countries, and low manufacturing costs and large-scale infrastructure construction have created conditions for their leading positions in international trade. As for China, it has already started its strategy of attracting overseas investment on a global scale, and India has followed closely with China's development. In fact, India has replaced China in 2015 as the largest recipient of foreign direct investment. square. In China and India, the still-growing apparel market hopes to surpass, and this growth momentum is considered an important trend in global apparel consumption. Putting aside the uncertainty of the development of the world's political and economic situation, from 2007 to 2015, China's textile and apparel market maintained an annual growth rate of 15%, while India also had an annual growth rate of 11%. For both countries, such outstanding annual growth rates have contributed to the upgrading of consumer demand.

In the next ten years, the manufacturing industry in China and India will continue to develop rapidly, and the textile and apparel industry will be the driving force of this high-speed train. Research shows that when a country's per capita GDP exceeds $2,500, it will experience economic growth driven by consumer demand. The Indian economy is expected to face this challenge in 2020, at a time when China has weathered it smoothly. In addition to the positive pull of economic development, the development of India's textile and apparel market will be driven by the growth of the youth labor force and the improvement of national purchasing power. At the same time, the consumption type of the people will change from demand-based consumption to desire-based consumption. In China's textile and apparel market, with the rapid development of China's e-commerce, the consumer market has become more diverse, and the development group of new retailers is much more mature than India.

Investment opportunities for "Made in India"

The huge market capacity enables overseas investors and overseas brands to enter the Indian market. At the same time, the industrial upgrading of China's manufacturing industry has gradually made India the world's largest clothing exporter, which is a very rare development opportunity for India. The Indian textile and clothing market will occupy China with a double growth rate. left blank. Adhering to a market-friendly and liberal development policy, the next important strategy for the Indian government is to create jobs for the youth groups in the country. On the other hand, it is to increase efforts to develop remote underdeveloped areas and rural areas. Therefore, when the government encourages investment from overseas, it pays special attention to the number of employment opportunities brought about by investment projects.

In such a high-speed development, Gujarat, India has positioned itself as the most competitive and advantageous investment area in India, especially a fertile business ground for tycoons in the apparel fabric industry. The Indian entrepreneur Samir's business is also located in this area. Although it is not a company specializing in textiles and apparel, as far as he knows, Gujarat has more than 1,500 large and medium-sized textile associations, and they are responsible for a quarter of the country's output. About half of the country's handmade textile production is concentrated in the city of Surat, Gujarat, which is also the largest producer of denim in India.

In the past few years, Gujarat has attracted a number of textile investment projects, bringing more business opportunities to the region. There are many textile product groups in India. Gujarat is in a sense the "hometown" of these groups. In addition, many excellent academic organizations also provide technical research and teaching support to people there, such as the National Fashion Industry Association. located here. Because of the large number of commercial preferential policies in hand, India's National Industrial Promotion Policy Department and the government's economic affairs department, in conjunction with the World Bank, selected Gujarat as the best investment region in India. Investment companies and individuals from overseas have seized the opportunity one after another. The intensive manufacturing, energy, consumer electronics, and chemical industries here are the “sought-after” industries to attract capital.

Even so, the various shackles existing in India cannot be ignored, such as imperfect transportation system, imperfect infrastructure, vague laws and regulations, and urgent need to improve system efficiency, etc. Development presents new challenges. The late former prime minister of Singapore, Lee Kuan Yew, once pointed out: "India once engaged in a state-planned economy, and the scope of state control was too extensive, resulting in a rigid bureaucracy and rampant corruption, so that decades of development opportunities were wasted." It is urgent to change this status quo.

Note: All the data in this article are from the material "Gujarat: A Globally Competitive Textile and Apparel Manufacturing Destination" of the "2017 Vibrant Gujarat 8th Global Summit" held in India from January 10th to 13th.