Tax rebates, faster clearance for firms moving from China

The government is working on further tax rebates, especially on goods and services front, easy availability of land, fast clearance of projects and reduction in production cost that could help manufacturers, eager to shift production bases out of China after the Covid crisis, choose India as a favoured destination.

Prime Minister Narendra Modi has held several rounds of meetings with ministries of finance, commerce, textiles, communications, electronics and information technology and MSME asking each one of them to come up with suggestions on further ease of doing business in their sectors to attract those leaving China.

“Multinational companies from sectors such as electronics, textiles, mobile phones, steel, hospitality sector, synthetic fabric and medical devices have evinced interest. They have approached the government at the centre and state levels. This is the most opportune time for the Make-in-India boost,” an official said.

Thousands of companies in several sectors are planning to exit China. Those from Japan, Germany, South Korea and the US have been looking at India as an attractive destination but land and several such clearances to set up units are coming in the way, he said.

Wistron, one of Apple’s manufacturing partners, said last week half its capacity could move out of China within a year. The plan had been underway amid the trade war between the US and China but Covid crisis appeared to have expedited the move. Wistron appears keen on shifting to India.

The official said a lot of startups are keen on relocating their investments in India. The government is contemplating tax holidays for them in the initial years of setting up their companies here. “Various things are being discussed,” he said.

The prime minister’s meeting with several key ministries focused on this particular problem when they discussed “plug and play” model to revive investment.

Under plug and play, only the implementation-ready projects having all clearances in place would be allocated through a transparent auction process akin to coal block allocation.

The concept, apart from speeding up the project, helps attract funds from the financial institutions at a faster rate.