Have you ever considered relocating your China manufacturing plant in India? If you answered yes to this question, you are not alone. Several companies are actively looking to diversify supply chains due to China’s weakened global position. This has translated into big gains for India as about two dozen companies including Foxconn and Samsung Electronics Co have pledged $1.5 billion of investment to set up mobile-phone factories in India. Hundreds of other companies have also announced that they would be moving their bases from China to India. 

As Covid-19 is continuing its devastating march across the world and the tension between U.S and China is at its peak, there is a great opportunity for India to overtake China as the world’s factory of choice. Here are a few benefits of setting up a manufacturing plant in India as compared to China.

1. Manufacturing labour cost: India vs China 

Labour rates vary around the world and companies that are looking to set up a manufacturing plant in any country are particularly sensitive to wages. India has some of the lowest manufacturing wages in the world. The average manufacturing labour cost is less than $2 per hour in India while it is more than $5 per hour in China.

2. Ease of doing business: India vs China

India is politically stable with good political and trade relations with leading markets around the world such as Japan, the US, Europe, etc. But currently, China has a global weakened position due to the Coronavirus allegations and the tension prevailing between the US and China. India also has a stable external sector such as a relatively stable Rupee and a large foreign exchange buffer.

Also Read: Why is this the right time to tap into the globally competitive Indian manufacturing industry?

3. Growth and benefits: India vs China

India’s performance in the Business regulatory environment improved from 142 (2014) to 63 (2019), progressing on 7/10 parameters. An approximate area of 461, 589 hectares has been recognized across India for companies that are moving their manufacturing plants to India. India has also seen an increase in disposable income that is expected to result in a 3X rise in consumption expenditure by 2025. India has also seen a 100% increase in household consumption growth in the last decade; 12x e-commerce sales growth in the last decade and a 44x increase in smartphone sales in the last decade. Also, the corporate tax rate in India is currently at 17% while in China it is 25%. Thus, India is a much more attractive and investor-friendly destination as compared to china. 

4. Labour force: India vs China

Although India is unmatched in the size of its labour force as opposed to China, India holds a large number of the skilled labour force. According to a report by the World Bank, India’s labour force numbers about 519 million and China’s labour force is larger with 783 million. But India has over 2.6 million STEM graduates and engineering talent and this number is expected to grow larger in the upcoming years. Under the Skill India initiative, the Indian government has collaborated with governments across the globe like the USA, UK, EU, Germany, France, Japan, etc. for skill transfer training, internship programs.

5. Logistics and Infrastructure: India vs China

Logistics and infrastructure of the country is an important factor to consider if you’re going to set up your manufacturing in India or China. Logistics and infrastructure can have a major impact on the manufacturing time and quality of goods. According to a report published by the World Bank, India ranks 44th among 160 countries studies while China ranks 26th in that list. The main reason why India lags behind in this list even though it has a humongous road network that spans more than 5.5 million kilometres is that 40% of these roads are unpaved. But India has world-class ports and airports located on global transport routes. India is also trying to improve the state of logistics and infrastructure in an attempt to seize this opportunity. So, we can expect better logistics and infrastructure than China within a couple of years.

Thus, considering all the current global events and incidents, with 1.3 billion people and history of upholding strong democratic values, India is easily one of the leading destinations for setting up a manufacturing plant and is all set to be the next giant in manufacturing. 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.

Also Read: Why thousands of companies have decided to move their manufacturing to India