Diversify to Differentiate Think India, Think Next! India: Favorable Global Manufacturing Destination

In this webinar, we explore opportunities, policies, and incentives available to conduct and diversify business in India.

Key drivers for India-Taiwan relations

• 160+ Taiwanese companies operating in India have formed the largest cluster in the Bangalore-Tamil Nadu-Andhra belt.
• Taiwan’s southbound policy: reduce Chinese dependency by increased cooperation across trade, technology, agriculture, etc with 18 nations
• India looks east policy and Act East Policy - promote economic, cultural, and strategic ties within the Asia-Pacific region
• Signing Industrial collaboration MoUs via Institutional level interactions

India’s growth story

“India took 63 years to reach US$1 trillion, 7 years for US$2 trillion, 3 years for US$ 3 trillion and by 2025 is projected to reach
US$5 trillion economy” - Aju Antony

• India is the #1 in the world for FinTech adoption with growing internet consumption
• India is #2 in the world for global retail index, global pharma and biotech workforce, smartphone market, and steel production
• India is #3 in the world for economic size, oil consumption, aviation
• Under National Infrastructure Pipeline (NIP), US$ 1.4 billion is being invested in infrastructure for achieving 200k km of roads, 600+ GW of energy capacity, 30+ airports, 80% internet penetration
• India is the #1 R&D destination with more than 1140 MNC supported centers employing 900k+ professionals
• 5 industrial corridors launched

Opportunities for Taiwan in India

• Automobiles: India is the 4th largest electric vehicle market in the world and plans to promote the automobile industry with ‘Automobile mission plan 2026’. Since Taiwan holds expertise in automotive parts manufacturing but has a small domestic market, India provides a market opportunity for Taiwanese companies.
• ESDM: With a CAGR of 25% (US$400 billion by 2025) in the Indian electronics market and greenfield electronic manufacturing clusters (EMCs) in 20/25 states, an FDI in India will provide Taiwanese an advantage in R&D. Also, an infusion of US$ 6.4 billion incentives for production, manufacturing, and exports in the electronics sector with US$ 100 billion worth of mobile devices to be produced by 2025
• Energy: collaboration opportunity as India’s aims to have 400 GW of renewable energy by 2030 and Taiwan is the 4th largest solar-powered battery manufacturer in the world
• Food: Due to limited land availability, Taiwan majorly imports its raw agricultural ingredients and India can bridge this demand as its the world’s largest producer of milk and 2nd largest for food grains, fruits, and vegetables. The Indian food sector is expected to grow to US$1.2 trillion by 2025 with 23/28 states providing support via mega food parks.
• Textiles: collaboration opportunity as Taiwan focuses on eco-friendly textiles while India is 2nd largest exporter of textiles across cotton and jute
• Startups: India’s 2nd largest startup ecosystem in the world can benefit from Taiwanese entrepreneurs and raise Taiwan’s international visibility.
• Healthcare: India offers Taiwan a US$ 50 billion worth medical devices market that is top 20 in the world along with US$ 373 billion worth overall growing healthcare industry by 2024. With US$ 200 billion to be spent on medical infrastructure and the Ayushman Bharat scheme, India will be receiving a major boost in healthcare.
• Metallurgical: With Taiwan being the 4th largest exporter of machine tools and one of the largest exporters of robotics components, India provides an opportunity with being the 2nd largest manufacturer of steel

Key initiatives by India

• Corporate tax reduced to 15% to promote investments and exemption for selected sectors
• To fast track investments and approvals, India has deployed Empowered Group of Secretaries (EGoS), single-window clearance cell, and project development cell across 25+ sectors.
• 30-50% capital expenditure subsidy in plant and machinery
• Import and export duty incentives to ease tax burdens
• Incentives like 0 permission set up in single form by states like Maharashtra

Entity formation

Any foreign business looking to do business in India can look at forming these entity options:

• Set up a wholly-owned subsidiary
• Limited liability partnership
• Find an Indian partner to form a Joint Venture (Private Limited)
• A non-incorporate entity in the form of branch, liaison, or project office

The tax regime in India

• On the direct tax front, India follows a federal tax regime where the federal government levies tax during the financial year April-March
• No tax on the distribution of dividends by the company
• Goods and Service Tax sums up all indirect taxes that range from 5% - 28%.

Necessity and potential for industrial infrastructure in India

“With only 14% GDP share in manufacturing (as compared to share of 30%, 20% and 35% for Taiwan, Japan, and the US respectively) and growing population to 1.5 billion by 2036, India has a wide scope and need to invest in industrial infrastructure”
- Dr. C Velan

Development plans:

• Constructing roads worth US$ 212.8 million by 2022 and increasing road length under Pradhan Mantri Gram Sadak Yojana - III (PMGSY)
• SagarMala project to upgrade the performance of the country’s logistics sector by infusing US$ 11.4 billion with 492 projects at various stages valued at US$ 64 billion
• Allocation of US$ 24.27 billion, US$ 5.36 billion, and US$ 10.33 billion on transport, communication, and railway infrastructure

Developing sustainable and integrated industrial parks that:

• leverages renewable energy and waste management
• has connectivity to public transportation
• provides ample opportunities for growth of businesses and workers
• Provides living and education facilities for the lifestyle of workers
• Provides plug and play infrastructure for the ease of business
• Example: OneHub Chennai

Role of advisory: CBRE

• Advising about location, infrastructure, policy-making, and incentives structure
• Understanding expectations and needs of the occupiers as per their business goals and future requirements
• Classifying clusters and curating industry-specific parks as per the country’s growth and trends