Blueprint for firms looking beyond China in works: FM
Finance Minister Nirmala Sitharaman has said she will prepare a blueprint for international companies that are looking beyond China to make India their investment destination.
She said industry leaders who are contemplating getting their businesses out of China are “definitely considering India is the pitch”. Therefore, she said, it might be important for the government to now see and meet up with a lot of industry leaders and invite them to India.
“I’ll go back and design in some way, whereby I will identify those multinational corporations, all American businesses or any other country European or a British origin who are moving out of China or who probably are even contemplating. I will make a blueprint with which I will approach them and put forward to them as to why India is a far more preferable destination,” Sitharaman said at the conclusion of her interactions at the annual meeting of the International Monetary Fund (IMF) and the World Bank in Washington.
That could be in specific areas in which India has common capacity ecosystem building, whether it is electronics, lithium-ion battery or any other semiconductors, she said.
Sitharaman said the government’s decision is not just going to be purely on the basis of what is happening between the US and China. “That could either aggravate the situation or probably just influence at some level. But the fact remains that there are companies which are looking at relocating for other reasons also,” she said. “That is why I gave that little fine line that I’m drawing about companies which would want to locate elsewhere outside of China. Even as I said that, I said that not every company wants to lock, stock and barrel get out of China, there are companies which will remain there to service the Chinese market.”
“After all little China as a very big domestic market and the their purchasing power, consumption style may be very different from what it is in India, but I’m making that margin already that companies will probably be there to service the Chinese market tension or not tension,” she said.
Attracting foreign firms
She said India wants to create an ecosystem to invite firms. “Even if they continue to be in China but still would want to produce from elsewhere either to export or to capture a new hub, domestic market like India.”
The minister said it is perceived that the opportunities in Vietnam are not that much attractive. “One of the conversations I was having with bank and the government representatives was that even Vietnam now probably is getting saturated. They don’t have enough manpower to address expansionary programmes of investment. So, given the fact that
we’ve given concessional taxation approach to corporate incomes, corporation tax having been brought down and the problems that I’ve just mentioned about Vietnam, there’s a higher chance that those firms which are moving out those investments which want to get out to China will certainly look at India.”
On multilateral co-operation During the International Monetary and Financial Committee Plenary Session, Sitharaman said the global risks and imbalances reinforce the need to strengthen international cooperation at the multilateral level, besides governmental initiatives.
A calibrated and balanced approach to deploying a mix of fiscal, monetary and structural measures by countries can help achieve their growth potential, a finance ministry statement quoted her as saying. The IMF should provide solutions that are specific to important growth geographies to help alleviate the current conundrum, Sitharaman said.
She said the IMF should evolve a framework that would assess the vulnerability of economies to capital flows. She also encouraged the IMF to guide concerted international action to combat illegal financial flows.
On India-us trade negotiations The ongoing trade deal negotiations briefly came up for discussion during a pull aside between Sitharaman and US Treasury Secretary Steven Mnuchin. Mnuchin is scheduled to visit India early next month. “My inputs are that the negotiations are going in full speed and there’s a great intensity with which both sides are engaging and hopefully the deal will be structured soon,” Sitharaman said.
I’ll go back and design a blueprint to approach corporations and put forward to them as to why India is a far more preferable destination for them
On crypto currencies
As Facebook’s proposed virtual currency Libra became a buzzword, Sitharaman said many countries have cautioned against rushing into crypto currencies.
“Some of them (countries) of course even suggested that they shouldn’t be using, all of us shouldn’t be using the name stable currency because that’s the expression they used. Many cautioned to the extent saying even the name should not be stable currency, it should relate to virtual currency or something of the kind,” she said.
On insolvency
“I don’t think we should escalate one case to reflect everything to do with IBC.” Her comments came amidst the alleged fraud at Punjab and Maharashtra Co-operative (PMC) Bank. “If ED attaches somebody’s property and as a result of which some uncertainty comes into the IBC process, it’s nothing first of all to say on the IBC itself,” Sitharaman said. “That’s not going to happen in every case when the company is going for a solution. So I don’t think we should escalate one case to reflect everything to do with IBC.”