As India eyes gains from China’s losses post-Covid-19, Madhya Pradesh, Odisha and the Tuticorin Port Trust have geared up to set up Renewable Energy Equipment Manufacturing Parks (REMP) to accommodate companies shifting their base from the dragon nation.
Their move comes after the Ministry of New and Renewable Energy (MNRE) wrote to various States and port authorities to identify land parcels of 50-500 acres for setting up the REMPs citing it as “an opportune time for India to bring policy changes to facilitate and catalyse manufacturing in India”.
Maintaining that it’s time for India to bring policy changes for facilitating manufacturing in India, the MNRE said it has already set up RE Industry Facilitation & Promotion Board to facilitate investment. The ministry has also got in touch with trade commissioners / representatives of various countries inviting them to invest in this promising sector in India.
Recently, Transport Minister Nitin Gadkari too had asked his Ministry officials to gear up for gaining from companies shifting out of China.
MNRE Secretary Anad Kumar sought collaboration and investment by US firms as he addressed the US India Strategic Partnership Forum earlier this week through a webinar.
Many companies have already started shifting China prior to the coronavirus outbreak due to the rising input costs and the US-China trade war. Jaguar Land Rover has started shifting to the UK from China while Samsung electronics decided to shift its production of premium flagship phones to Vietnam. If Japan has earmarked $2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China as the coronavirus disrupts supply chains, Wistron Corp, one of Apple’s manufacturing partners, is keen to shift some plants to India.
The Government last month notified three schemes with incentives totalling Rs 48,000 crore to boost mobile phone manufacturing in the country and the dominant production-linked incentive (PLI) scheme has the lion’s share of close to ?41,000 crore with sops to be spread over three years. The aim is to attract top smartphone players like Apple, Samsung, Oppo and Vivo to set up their entire value chain in India, and make the country their export hub.
According to ASSOCHAM, a large number of engineering exports from India can fill up the market vacated by China.
“The three power and renewable energy sector non-banking financial companies, namely, Power Finance Corporation Ltd, REC and Indian Renewable Energy Development Agency (IREDA), have reduced their repayment charges to 2 per cent to enhance funds availability for new projects. Moreover, IREDA has brought out a scheme for project specific funding to promote renewable energy manufacturing in India,” the Ministry said.
“These hubs will manufacture equipment such as silicon ingots and wafers, solar cells and modules, wind equipment and ancillary items like back sheet, glass, steel frames, inverters, batteries, among others,” the MNRE said.
India has around 10 GW of wind equipment manufacturing capacity. It imports about 85 per cent of its solar cells and modules requirement. To incentivise domestic manufacturing, the Centre has announced provisions to enable levy of basic customs duty on import of solar cells and modules.
Earlier, the Yogi Adityanath government has also asked bureaucrats to chalk out a special package to be offered to multinational companies which are looking to shift their manufacturing basis and units out of China. Gujarat is also eyeing on the investment from Japan.
According to Chinese Customs data, the trade between China and India fell 12.4 % year-on-year to $12 billion in the first two months amid the coronavirus outbreak.
China is the third-largest trade partner for India when it comes to exports with a total trade value over $16.3 billion in 2018. The massive MSME sector in India also relies heavily on Chinese imports due to low manufacturing cost in mainland China and the high demand for products, especially consumer electronics, in the domestic market.