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”.