India steps up efforts to lure companies moving out of China

Top policymakers in India have started discussions on a framework that will attract global investors looking to shift manufacturing to the South Asian country, a senior government official told The Economic Times.

“This is needed as multinational companies looking at relocating from China to India would prefer flexible central laws over state laws for uniformity of operations across different locations,” the official told the daily newspaper. 

The states of Uttar Pradesh, Madhya Pradesh and Gujarat have passed executive orders exempting new establishments from most labor rules. So, businesses there have been allowed to extend working hours from eight to 12 hours per day as part of the reforms. 

Consultations with stakeholders were initiated by the labor ministry soon after the government’s announcement of the $266 billion (Rs 20 lakh crore) Covid-19 relief package.

“Industry has requested the government to create a right ecosystem for employers to grow while keeping in mind the wellbeing of workers,” an unnamed person familiar with the matter told the ET, adding that restricting exemption from labor laws to just new establishments (as proposed by some states) was not justified. 

According to another informed comment, one of the proposals being examined is speeding up the reform measures. 

“Ordinance route could be adopted to enact the labor codes,” this official said. 

Earlier this month media reported that India’s government had reached out to more than 1,000 US businesses with an offer to relocate from China. Among those companies were medical equipment producers, food processing units, textiles, leather and makers of auto parts.

New Delhi has reportedly offered to ease tax and labor laws, and to allow easier access to land. Officials told the companies that India was more economical in terms of securing land and affordable skilled labor than if they moved back to the US or to Japan, even if overall costs were still higher than in China.

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