Chinese Businesses Take Interest in “Make in India”

Indian Prime Minister Narendra Modi launched the “Make in India” program in September 2014. The program aims to make India a global hub for several manufacturing and services industries. Manufacturing sectors include automobiles, automobile components, chemicals, defense manufacturing, electrical machinery, electronic systems, food processing, leather, pharmaceuticals, textiles and garments.

Service industries include sectors such as aviation, biotechnology, construction, IT, media and entertainment, oil and gas, ports, renewables, roads and energy, highways, space, thermal power, tourism, and hospitality. Modi’s recent visit to China was an important step in welcoming Chinese businesses to participate in the “Make in India” program. This paralleled Modi’s previous promotional efforts during his trips to Australia, Canada, Japan, France, Germany, and the US. China is poised to become an active participant in “Make in India.” Chinese companies like Huawei, Haier and Lenovo, which already have a presence in India, are expected to expand their production capacities over time. On top of this, Xiaomi, China’s top smartphone company, is investing in India and has Tata Industries as a major stakeholder. Finally, Alibaba plans to invest in India’s booming e-commerce industry. During Modi’s visit to China, several agreements were signed by Chinese and Indian industries in renewable energy, solar power, telecom, offshore delivery services, IT, port development, industrial part, integrated steel, capital goods, and filmmaking. While Modi has been successful in generating interest among Chinese industries in “Make in India,” his main challenge is to simplify India’s business processes and regulations. He has to significantly improve India’s low 142^nd “ease of doing business” ranking. Once India’s ease of doing business rank improves, investor perceptions towards India should improve. The “Make in India” program can then become very attractive to Chinese and other investors especially given projections India will grow at more than 7 percent annually in the medium term.