Manufacturing Shift From China To India Has Begun, Patience Needed For Further Success: CEA Nageswaran

V Anantha Nageswaran, chief economic adviser to the Government of India, has advised patience for the shift of manufacturing from China to India.

Nageswaran, in response to a question after his speech at Madras School of Economics, stated that manufacturing is shifting and has already begun, but will take time.

"What we are hearing, somewhat anecdotally, is that due to the rapidity of regulatory changes in China in the last 2-3 years, and also due to the way the pandemic was handled in the initial stages, there is a concern among MNCs — which is not aired publicly — that they do want to relocate (their facilities out of China),” Nageswaran was quoted as saying by The Hindu Businessline.

He added, “Naturally, their first choice is to go to countries with a similar culture to China, such as Vietnam".

According to Nageswaran, India's success in manufacturing pharmaceuticals and mobile phones is an indication of future successes.

Nevertheless, India is comparatively behind other countries, and patience is needed.

During his speech, Nageswaran discussed India's economic growth since 1998, acknowledging the challenges it faced due to events such as Pokhran-related sanctions, the dot-com burst, and the 2008 financial meltdown.

He highlighted various reforms implemented between 2015 and 2020 that included infrastructure build-out, RERA, digital infrastructure, and introduction of GST and IBC.

He concluded by stating that today, the banks and corporations in India are much stronger than before.

The speaker compared the current economy to the US' in the 1990s, where a high real interest rate of 3 per cent did not hinder growth as it reflected the high demand for credit.

Nageswaran stated that high-interest rates in India signify a desire for credit and won't hinder growth.