As a result of trade tensions between the US and China, many manufacturers have decided to shift production out of China. India, one of the world’s fastest-growing large economies that signifies large growth opportunities and stability due to relative protection from various geopolitical events is seen as an attractive spot by many companies for setting their manufacturing plants. Moreover, the Indian government has also announced many policies to encourage new setups in India. Here are some of the major government policies to encourage new setups in India.

1. Government policies for Privatization

The government has opened the commercial coal mining and space sector for private participation. The government is also considering a further review of strategic sectors with a potential privatization agenda.

2. Government policies for the electricity sector

The new reforms announced by the Indian government in 2020 could potentially reduce power sector losses, bring more competitive power rates for the industry, and increase efficiency and competition in the power distribution segment.

3. Opportunities in mining and healthcare sectors

The Indian government has ensured that it will take measures to create investment opportunities for mining by auctioning licenses that would allow them to go from exploration to mining activities. The government has also proposed to increase public investment in health care facilities.

4. De-controlling agricultural sector

Government proposes to remove controls that would allow for a nation-wide market for agricultural commodities. This gives higher farm prices and greater certainty to private players in sourcing agricultural produce.

5. Increased local defence manufacturing and aviation opportunities

Under the new initiatives to turn India into a global manufacturing hub of military platforms, recent policy changes intended to promote domestic defence manufacturing and encourage MROs, that will boost both defence and civil aviation volumes.

6. Continued commitment to foreign capital

The Indian government has increased the foreign direct investment (FDI) limit in the defence sector from 49% to 79% under automatic route and beyond 74% through the government route. This announcement of increasing the FDI limit in defence to 74% and allowing Indian companies to list overseas underscores India’s deep commitment to foreign capital.

On top of these policies, the government has also cut the corporate tax to 17% to boost investment and transform India into a “manufacturing hub”. Also, the free flow of goods in and out of the country, simplified customs procedures, a major upgrade of port infrastructure supports the government policies to encourage new setups in India. Thus, considering all these, India is easily one of the leading destinations for setting up a manufacturing plant. If you’re planning to move your manufacturing plant from China to India or decided to set up a manufacturing unit in India, as a reliable outsourcing company in India, Isourcing can make the process a whole lot easier. We can support you by doing a market assessment study and evaluation of possible collaborations and entry strategy. We also perform a detailed SWOT analysis of potential incentives and benefits that could influence decisions and engage with government and stakeholders to determine feasibility. Thus, with Isourcing, you can effectively minimize the risks and reduce the overall costs involved in setting up the manufacturing unit in India.