Good News for India

Positive economic and manufacturing trends continue to surface as India continues to add credibility to the government wide “Make in India” campaign. ET2C has often mentioned the merits of the “Make in India” campaign and have lauded efforts by Narendra Modi to improve the manufacturing landscape in his country. Good tides continue to reach the shores of India, as the recent drop in oil prices has given the country a great boost to the country’s effort ongoing effort to open up to foreign buyers.

The precariously dropping price of oil has had severely adverse effects on oil exporting nations such as Russia and Venezuela. However for oil importers such as India, the drop has been welcome and in fact quite beneficial. The developing Indian economy has long been reliant on imported oil and this has impeded the maturation of Indian manufacturing sector. Even in last year, the high price of oil added a $100 billion drag on the economy. Up to now, logistics in India were often expensive but since crude prices now halved, fuel costs for trucks and cars have also plunged. This has helped lower transport expenses and has quelled inflation of goods and services in India. Government fuel subsidies have notably lowered as well, which has helped the control the country’s chronic budget deficits. “We’ve got essentially a $50 billion gift for the economy,” said Raghuram G. Rajan, the governor of the Reserve Bank of India.

Greater Ease of Business

Indian finance minister Arun Jaitley also recently made moves to speed along India’s transition. His new budget was filled with proposals that are expected to help manufacturers save on costs while allowing further access to skilled labor. The budget announcement featured specific proposals such as reduction of customs duties and taxes while speaking of government efforts to allow for a greater ease of business.  Finance minister Jaitley stressed the imperative of his tax proposals as they were inclusive in the promotion of manufacturing.  Prime Minister Modi’s influence and cohesion on his government became easily transparent, as the phrase ‘manufacturing’ was found mentioned 15 times in Jaitley’s speech while Make in India was heard 10 times.

Moreover, much like Modi’s influence and political accountability, the finance minister remained true to his word. He announced customs duty cuts on 22 items that will allow Indian companies to import parts to manufacture products at a much lower cost, thus driving Indian supply chain costs down. With every month India poses itself as an even more attractive manufacturing base for your sourcing needs. Please contact us today for more information regarding ET2C’s expanding sourcing and procurement capabilities in India.

Reports on India’s financial numbers continue to promise economic prosperity for the nation. Indicators are up in almost all sectors as the government’s promises for economic upheaval continues to inspire the nation.A swath of hopeful predictions are being made for the nation, as India’s exports are expected to increase from $40 billion at present to $85 billion in 2023 which will ideally allow the nation to achieve a GDP growth rate of 7 percent per annum.

Other countries have taken note of India’s bright prospects, as Japanese investors have ranked India as the top choice for investment potential in comparison to other emerging markets. As part of the Japanese government’s goals for their economy, the country is seeking to triple infrastructure orders for India to about $300 billion within the next 10 years. Japan feels their country will be an important investor in India’s much needed infrastructure, stating that with their regional experience they will have an instrumental role in bringing India into Asia’s elaborate cross-country manufacturing supply chain.

This is good news for India, as newly elected India Prime Minister Narendra Modi  is eager unblock stalled infrastructure products and seeks to promote growth by creating new high-speed train lines and smart cities. With ambitions from Shinzo Abe to boost the Japanese infrastructure-system export orders, Japan is natural answer that can help revitalize India’s stagnant economic growth. Leaders Modi and Shinzo are reported to already have established a good rapport on personal level, and analysts have posited “bilateral economic relations between Japan and India are set to blossom.

While news on FDI generally promises a brighter for future India, the implications for Japanese investment are diverse. Firstly, as the Japanese have a wealth of expertise in infrastructure development, the newly created work by these foreign investors is certain to be reliable and capable to deliver quality products. With this pedigree, foreign buyers can trust that their sourcing orders will be at the same standards as any other manufacturing nation in South-East Asia. Furthermore, Japanese infrastructure is bound to expedite India’s capabilities for manufacturing and export, while alleviating pressure on the Indian government.

By allowing the Japanese to focus on key manufacturing areas, India will consistently improve its abilities to receive and expedite orders. Our Indian office noted that some of these investments have already provided great changes in Bangalore. Hari Sankar, the office director noted these changes in the automobile and telecommunications sector in surrounding areas are already improving the ability to source. Overall, this genuine cooperation between India and Japan is sure to bring increased success to the region.