Boost China-India economic ties
India has accelerated its efforts to make it easier to do business in the country. As China’s labor cost advantage shrinks, Chinese enterprises should pay attention to changes in the Indian economy.
In 2018, India saw more than $38 billion of inbound deals, outnumbering that of China for the first time in two decades, the Economic Times reported. India is moving in the right direction to make foreign investment a powerful engine for economic growth and poverty alleviation. It is the same strategy adopted by China three decades ago at the initial stage of its industrialization process.
Ahead of a general election, Indian Prime Minister Narendra Modi is facing growing discontent as people question whether his reforms can create enough jobs for young people. But the foreign investment figures suggest that Modi has done a good job in addressing unemployment.
The Modi administration has undertaken significant steps to reform India’s tax system, upgrade its bankruptcy laws and relax restrictions on foreign investment. The country witnessed a 23-place jump to a record 77th position in the World Bank’s latest report on the ease of doing business, which covered 190 countries and regions. Facts have proved that India’s economic reforms are conducive to improving the business climate for foreign investment.
Modi has launched a range of reform initiatives, and now the Modi administration must tell local authorities to fully implement these policies to ensure that the country’s economic reform will go forward ahead of the general election. Effective implementation of current policies is more important than launching new initiatives, and this effort will lay the groundwork for a better business climate.
India’s labor cost advantage has led some Chinese manufacturers to look closely at setting up assembly lines in the country. Achieving a better understanding of India’s changing business climate will help achieve win-win results and joint development of the two emerging economies.
China and India must enhance strategic communication and mutual trust to move their economic ties forward. Currently, the most urgent task is to prevent the suicide attack in the Pulwama district from affecting economic relations and India’s inbound investment.