India's Prime Minister Narendra Modi hugs US President Donald Trump as they give joint statements in the Rose Garden of the White House in Washington, the US, on Monday. Picture: REUTERS
Trump’s move to blame China for its handling of the Covid-19 outbreak, which has killed more than a quarter of a million people worldwide, is expected to worsen global trade ties as companies and governments move resources out of the world’s second-largest economy to diversify supply chains. Japan has earmarked $2.2bn to help shift factories from its neighbour, while EU members plan to cut dependence on Chinese suppliers.
Officials have told companies that India is more economical in terms of securing land and affordable skilled labour than if they moved back to the US or Japan, even if overall costs are still higher than China.
Secretary of state Michael Pompeo in April said the US was working with India, Australia, Japan, New Zealand, South Korea and Vietnam on how to “restructure these supply chains to prevent something like this from ever happening again”. The administration was “turbocharging” an initiative to remove global supply chains from China, Reuters reported this week, with one official saying it’s pushing for an “Economic Prosperity Network” of trusted partners.
It could also present India with a chance to finally push through long-stalled reforms on land, labour and taxes that have hindered investment for years. Modi’s second term has been marred by nationwide protests and slow growth since his party scored a landslide election victory a year ago, presenting a risk for companies planning to move.