India a much better destination to invest for European companies: Report
New Delhi, July 23
With investments in China no longer turning out to be profitable due to the overcapacity in the economy with excessive competition that has triggered price wars, India is a much better destination to invest for European companies, according to an article in the Euractiv.
The article highlights that profits have crashed not only for foreign companies but domestic Chinese companies as well due to the weak local demand for goods that has led to a glut in the markets.
"India offers what Europe needs and what China increasingly does not - a vast and fast-growing consumer market, rising household demand, and, crucially, a manufacturing base so underdeveloped that there is room to build rather than a saturated field to fight over," states the article authored by Alicia Garcia Herrero.
Returns on European investment in India already exceed those in the mature US and UK markets, which absorb most EU capital. The EU is, in fact, already India's largest genuine foreign investor.
"And yet India ranks only eighth among destinations for European firms, and European manufacturing money in particular has barely moved," the article points out.
It further argues that Europe has more leverage here than it is using, and the source of that leverage is its own industrial policy.
"The Industrial Accelerator Act, Brussels' push to rebuild strategic capacity and cut dependence on China, will increasingly steer public money and procurement toward European suppliers and toward partners inside the WTO Government Procurement Agreement," the article opines.
India is not a party to that agreement, it adds.
According to the article, "India wants European factories, technology and supply-chain integration. Europe wants legal certainty and reciprocal market access".
The Industrial Accelerator Act turns that into a concrete trade: accommodate Europe on investor protection and procurement now, and India secures its place in the supply chains Europe is actively rerouting away from China.
The article further says that the strategic window is open because "profitability, not politics, is pushing European capital out of China" and "India is the logical destination for it".
— IANS
Reader Comments
Interesting timing - while Europe is looking at India, our own manufacturing sector still faces many challenges. We need to ensure this investment creates actual jobs for our youth, not just becomes another data center or assembly line. Hope the government uses this leverage wisely to negotiate better terms for our MSMEs too.
As someone who works in international trade, this article captures a real shift. The profitability argument is key - companies follow returns, not politics. India's internal demand is indeed massive and underutilized. But the WTO procurement issue is a real blocker - hope our negotiators see this as an opportunity to join strategically rather than a concession.
Yaar, finally some recognition! For years we've been hearing about China this, China that. Now the tables are turning. But I hope this doesn't just benefit big corporates - the real test will be whether it creates employment for our millions of young graduates. Make in India needs to become Make for India and Make for the World! 💪
From an investment perspective, the logic is sound. China's overcapacity and price wars are real issues. India offers a greenfield opportunity with its underdeveloped manufacturing base. But let's be honest - infrastructure bottlenecks, regulatory complexity, and skill gaps are still significant hurdles. The window is open but not for long - we need to act fast on policy reforms.
As a student of economics, this is fascinating. The article rightly points out that this isn't about politics but pure profitability. India has the demand, Europe has the capital and technology. But we must ask - are we ready to absorb this investment
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.