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How COVID 19 will fuel manufacturing exit from China

While all the world is still suffering, the birthplace of Coronavirus, China is seeing rays of hope. The country could make a few relaxations in the lockdown and hence the economic state is being better.

Irrespective of how many lives the virus claimed in China, this pandemic is going to see a decline in the economical status post-lockdown, as most of the countries are seeing to cut ties with the large Asian nation.

China has been the one county that would be used for setting up manufacturing units of all countries, given the vast lands, low labour prices, and heavy population. But now, the impact of the pandemic would change the position of China, according to studies of industry experts. With rising labour costs, workforce shortage, a trade war with the United States, China may not be able to retain its position as the world’s largest factory.

China has always been the largest exporter of goods, ahead of other nations like Us, Japan, India, Germany, etc. until the economic cold war erupted between Beijing and Washington.
There has been a decline in exports since January 2019.
It is also because of both the President’s headstrong ways that there is no prediction on who is going to compromise.

But almost surely, all the companies around the world are trying to avoid taking sides and reduce their dependence on China and Chinese manufacturing.
With the companies backing away from China, they might start looking up at India, which is quite good news. India has almost all the facilities as China and with the PM’s Make in India program, it has become even better and friendlier.

The Government slashed down the corporate tax rates of firms receiving incentives or exemptions down to 25.17 percent from 35 percent and the rates of firms that do not receive incentives or exemptions to 22 percent from 30 percent.
The companies also assume that success in mobile manufacturing in India would be replicated in any other industry. This is a piece of good news.
But for the country to start its manufacturing, it must come out of its lockdown, which is indefinite as of now. So, everything is a matter of time.

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