![]() India has some of the lowest labor costs in Asia: an hourly labor cost in India is roughly one-third the cost of the same hour in China. India, on the other hand, just wants to develop a manufacturing base.Ĭompanies that want to manufacture cheap goods in Asia need to understand how lower labor costs in India can help them achieve their goals. Analysts expect this large, young workforce to make a significant contribution to India’s growing consumer base.Ĭhina is committed to developing high-end, value-added manufacturing to fuel the next stage of its economic development. By 2027, India is likely to have the world’s largest workforce, with a billion people aged between 15 and 64. More than half of India’s total population is under the age of 25, and two-third are less than 35 years of age. In addition to a population of 1.35 billion people, India has a large, young population. Growth in digital connectivity, infrastructure development coupled with rising household income, and an increase in India’s consumers spending represent the massive opportunities that lie in the Indian market. China plus hourly news driver#Rising affluence is the biggest driver of this growth, followed by the change in the consumer behavior and spending patterns, especially in lower-tier cities. This is likely to make India the third largest consumer market by 2025. The country’s nominal year-over-year expenditure growth of 12 percent is more than double the anticipated global rate of 5 percent. India has a GDP (PPP) of US$7.78 trillion, the third largest in the world on this measure after China and the United States. Spreading production across several markets leaves producers less vulnerable to supply chain disruption, currency fluctuations, and tariff risks in any individual market. Narrowing margins and the prospect of further tariff increase is prompting companies to reshuffle their production network and move their factories from China to lower-cost countries in Asia. While China has attempted to soften the blow for exporters, the increased tariffs have disrupted supply and distribution chains. So far, the US has levied tariffs on US$250bn of Chinese products. The escalating US-China Trade War has huge implications for heavily integrated and globalized supply chains. This has prompted the Chinese government to take aim at polluters with new environmental standards, pollution control systems, and environmental taxes.Īpart from these new regulations, difficult legal hurdles, and a maturing social security system have forced foreign investors to rethink their strategies and move some of their production to other countries. However, in the past decade, the Chinese government has gradually phased out its preferential policies – partly to support its domestic companies, by unifying the tax rate for domestic and foreign companies at 25 percent.Ĭhina is known as the ‘world’s factory’, but these factories have brought severe pollution to much of the country. Until 2007, companies with foreign investment paid 15 percent corporate tax, while domestic firms were subject to 33 percent tax in China.
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