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India Looks to Lure Factories Leaving China With Land Access

When factories leave China to avoid the kinds of supply disruptions that came in conjunction with coronavirus, India wants to be the one to welcome them.

The lure, according to a Bloomberg report, will come in the form of a 461,589-hectare land pool (somewhere between the size of Rhode Island and Delaware) that will be designated for manufacturers. Textiles are among the government’s 10 hand-picked sectors to benefit from the plan. The land, which is spread across the country, includes existing industrial land in Tamil Nadu, where there’s already a bustling ready-made garment industry. It could also include available land in special economic zones where infrastructure is already in place.

India Prime Minister Narendra Modi’s administration is reportedly working with state governments to ease land acquisition impediments (currently, companies hoping to set up factories in India are on their own to acquire the land), Bloomberg said, citing sources with knowledge of the matter. Already, manufacturers from the U.S., China, Japan and South Korea have reportedly expressed interest in investment.

“We have the advantage of coastline and ready-made industrial parks with necessary clearance,” Rajat Bhargava, special chief secretary of the state’s revenue department, told Bloomberg. “We are focusing on certain sectors like IT and related manufacturing, food processing, and chemicals and have been holding video conferences with investors.”

As of March, China’s share of U.S. apparel and textiles imports has fallen 39 percent year over year and now the country that once claimed the lion’s share of clothing coming into America, accounts for less than 31 percent of the market, according to data from the U.S. Office of Textiles and Apparel. The country, much like its non-China sourcing players, is suffering from order drought and ever-escalating tensions with the U.S., which could further complicate trade in the not-distant future.

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India currently accounts for 7.5 percent of U.S. apparel and textiles imports, and its growth over the year to March was flat. Currently, India ranks No. 63 on the World Bank’s Doing Business 2020 report for its ease of conducting affairs, a much-improved position from No. 130 in 2016. It ranked among the top 10 improving the most where starting a business and trading across borders is concerned.

While the land pool will have its appeal for anxious investors, recent easing of Modi’s mandated lockdown has sent coronavirus-related deaths up sharply in the country. According to the World Health Organization’s (WHO) latest situation report, confirmed COVID-19 cases in India have reached nearly 63,000. In the past 24 hours, there were 128 reported new deaths, a steep climb from a mid-April daily death rate of less than one-third of that. Experts say India hasn’t even reached its peak with the pandemic, and with a dearth of testing—meaning the case count is higher than what reports would indicate—it may be months still before the crisis is contained there.