Atmanirbhar Bharat initiative may add $160 billion by 2024 to trade earnings
With New Delhi emerging as a feasible alternative to Beijing for manufacturing and other capital-intensive industries in a global de-risking of supply chains, India can increase its earnings from overseas trade to $160 billion by 2024 with potential investments from the likes of Apple Inc. and Foxconn.
An internal Citi report on India's Atmanirbhar plan highlights opportunities in areas like manufacturing, services, solar, and chemical industries. The Atmanirbhar plan focuses on enhancing self-reliance in industries that hitherto depended on China for crucial supplies.
"Many global manufacturers look interested in an additional base to China to diversify risk," said K. Balasubramanian, Head of Corporate Banking, Citi South Asia. "When you look at an investment, you aren't looking at it with a few quarters in mind, you are taking an investment decision on a country across multiple themes.”
Citi is making a case for fresh investments into India to global investors. In the Citi presentation shared with the authorities, it is highlighted that India's share in global exports can go up to 3.4% in 2025 and 6% by 2030.
The bank recognized the potential areas of the country to become a base for global manufacturing, or part of an MNC’s "China plus one" strategy. Export opportunities can arise out of textile and apparel, electrical and mobility, telecom and heavy engineering over the next three years, generating annual flows of over $100 billion.
"Electronics and fabrication manufacturers could well be the first comers through this window," said Balasubramanian.
Heavy engineering and electronics could each account for $50 billion of the potential flows. Telecom, the sector fraught in regulatory tangles, can offer an investment opportunity of up to $20 billion.
"Global corporates would be encouraged by the recent reforms in areas where India was earlier perceived as weak," said Balasubramanian.
A series of reform are being pursued by New Delhi regarding corporate tax breaks to labour laws, legal system, credit access.
Proposals have been made to streamline 44 labour laws into just four labour codes. A relaxation of state labour laws is also under consideration. The government is also looking into land acquisition policy, a key factor for any institutional investor.
The authorities are dealing with proposals to offer tax breaks to foreign investors, including sovereign funds, simplified GST returns, pre-filing tax returns, abolition of dividend distribution tax.
Balasubramanian said the 'China plus one' strategy can draw in investments of $5 billion in solar, and $10 billion in chemicals.
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