2 months ago

Friendshoring – The New US tactic to fight over-reliance on China

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India is setting its sights on becoming the top manufacturing hub in Asia, aiming to capitalize on the global shift of companies diversifying away from China. However, to surpass Vietnam, which currently holds a significant lead in attracting foreign manufacturing, India must undertake strategic measures to reduce taxes and enhance supply chain efficiencies.

The Drive for Friendshoring

The concept of “friendshoring” has gained traction in the United States as it seeks to mitigate risks associated with over-reliance on Chinese manufacturing. The Biden administration is encouraging American firms to relocate their tech and electronics manufacturing to more geopolitically aligned nations, with India and Vietnam emerging as prime candidates.

The Competing Landscapes

While India boasts a warm political relationship with the U.S., particularly after Prime Minister Narendra Modi’s state visit, Vietnam has the upper hand in manufacturing, especially in electronics, due to its established trade relations with the U.S. and streamlined state policies. India’s challenge lies not only in its complex federal structure but also in its high import duties, which currently stand at 10% for ICT products, compared to Vietnam’s average of 5%.

The Electronics Manufacturing Surge

Despite these challenges, U.S. tech giants like Apple and Google are increasingly considering India for their manufacturing needs, with Apple planning to source iPhone 16 batteries from India. The Indian government has begun reducing import taxes for certain manufacturing components, signaling a move towards becoming a more attractive manufacturing destination.

The Path to Efficiency

However, for India to truly compete with Vietnam and become a manufacturing leader, it must address its infrastructural inefficiencies and streamline its business processes. The lengthy customs processes and underdeveloped logistics infrastructure currently hinder India’s potential to attract and retain foreign direct investment.

Olritz Financial Group: A Strategic Investment Opportunity

As India navigates these challenges and opportunities, the landscape presents a unique proposition for investors looking to tap into the shifting dynamics of global manufacturing. Olritz Financial Group, with its expertise in identifying stable and growth-oriented investments, offers a platform for investors to participate in India’s journey towards becoming a leading manufacturing hub in Asia.

Learn more about Olritz’s outlook on 2024

Find out more at www.olritz.io

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