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27 Apr, 2019 14:45

US manufacturing firms eye relocation from China to India as trade war bites into profits

US manufacturing firms eye relocation from China to India as trade war bites into profits

As the US-Chinese trade war continues, hundreds of US firms are looking to shift their manufacturing base from the Asian giant in order to avoid further dips in their profits — with India a potential benefactor.

Leading the effort to aid the relocations is the US-India Strategic and Partnership Forum (USISPF), a US-based advocacy group who has been discussing potential moves with as many as 200 US firms with manufacturing operations in China. The group has also drawn up a list of recommendations for the victors of India’s ongoing general election on how to make the most of the potential relocations.

“We need to understand how we can attract those companies,” said the group's president, Mukesh Aghi, in a recent interview with the Press Trust of India. He called for an acceleration in economic reforms that would improve transparency, as well as making customs procedures and land issues easier.

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“There’s a whole plethora of reforms that need to go further down, and I think that is also going to create a lot of jobs,” he added.

Aghi also stated his “strong belief” that whoever grabs the reigns on power in New Delhi should seriously consider a Free Trade Agreement with Washington, in part to offset the threat of cheap imports from Beijing. “You can put barriers to Chinese goods and still have the US providing access to the Indian market and Indian companies having more access to the US market,” he noted. A full dossier of potential actions for the Indian government is expected to be ready by the time India’s lengthy election process ends on May 19.

News of a potential exodus of US manufacturing from China to India follows an October 2018 survey of US companies with bases in China, conducted by the American Chamber of Commerce in South China. Of the 219 firms surveyed, one-third of which were involved in manufacturing, 64 percent said they were considering switching production lines from China to other countries. However, only 1 percent said they would move their operations back to the US, favoring new bases in South East Asia.

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