Chinese Investments will boost India’s Manufacturing Sector
Chinese companies have major plans for India with a Foreign Direct Investments (FDI) of $5-10 billion. This is a marked increase compared to their FDI in India of $1.5 billion over the last decade and a half.
The investment will assist Indian as well as Chinese companies in synergising and restoring balance in the existing imbalanced economic relations between them. The entrance of Chinese players is especially forthcoming as it comprises of major players including large real estate developers and large car makers. This is in addition to the other medium and small companies and high net worth individuals.
The Chinese companies are also investing in Indian startups and major service providers. This will help Chinese companies in tapping India’s potential in the Information Technology space. This will also provide the much-needed cash flow to Indian startups for scaling up their operations at a global scale.
The latest investments differ from the earlier ones. Earlier, the Chinese companies were primarily focused on infrastructure projects like power, ports, transport and other sectors. Several of these got into problems due to strategic concerns and questions relating the quality of the Chinese equipment. Moreover, the coming of new Chinese companies has much to do with the Chinese strategy of re its economy through shifting from investments re balancing and exports to consumption and services sector.
China aims to benefit from this by tapping into the vast surplus capital as well as utilising the potential of the skilled workforce. China will also benefit from the rising labour supply in countries like India. China will also benefit as it will be able to partially relocate production and tackle the declining numbers of Chinese joining the Chinese work force as well as the increasing wages.