Virendra Pandit
New Delhi: Escalating friction between the U.S. and China could give India a much-needed boost to emerge as a global technology hub, but, to make it possible, New Delhi will have to remove stumbling roadblocks like excessive red tape and government inefficiency.
“Washington’s technology cold war with Beijing has resulted in strategic decoupling and promoting manufacturing and supply chains to shift to new locations,” according to a report released Tuesday from the Asia-based Hinrich Foundation set up by American entrepreneur Merle Hinrich.
“India finds itself well-positioned to absorb these supply chains,” media, quoting the report, said.
Several factors are currently working in India’s favor, it said, citing U.S. President Joe Biden’s call for “China-free” supply chains in certain sectors, as also India’s active membership in the Quadrilateral Security Dialogue (Quad) with America, Australia, and Japan.
Leaders from those four nations held their first video-conferenced Summit early in March in which they also partly addressed concerns about Beijing’s growing economic and military power. India and China had engaged in violent clashes along their Himalayan border in 2020, but they both pulled their armies back in February 2021.
Technology behemoths like Apple, Amazon, and Samsung that earlier relied on China are now shifting production facilities to India and Southeast Asia. This has mounted tension between Washington and Beijing, the report said.
The Covid-19 pandemic is also hastening this shift as companies take advantage of India’s new productivity incentive programs, enormous labor base, and rapidly growing domestic market for devices and internet services.
“Everybody that I talk to in the tech sector is moving stuff out of China, anything that they consider sensitive,” said Alex Capri, a Singapore-based research fellow who authored the report. India is also looking to reduce its own dependence on China, he said.
However, India will also have to urgently address longstanding issues that have hampered the growth of manufacturing, it said, adding that excessive regulations, taxes, and a lack of coordination between the central and state levels of government have deterred investors.
India’s road to emerge as a global technology hub will depend on its ability to quickly develop smartphone manufacturing in which China still has a lead.
It advised New Delhi to lobby Washington to persuade top chipmakers like Taiwan Semiconductor Manufacturing Co. to open certain plants in India.
