Exclusive: India will woo foreign companies like Apple to take advantage of the US-China trade war

NEW DELHI (Reuters) – India's target companies such as Apple, Foxconn and Wistron Corp. A charm offensive to encourage them to come out of the war that is hitting China, according to a source and document seen by Reuters.

On August 14, several Indian officials met and discussed a list of "target companies" also including Taiwan-based contract manufacturer Pegatron Corp, an informed source said.

The dispute between the United States and China, the world's two largest economies, has led to billions of dollars in tariffs on goods and disrupted global supply chains, pushing companies to look for other ways to invest to escape the higher fees.

Among suggestions that India is lagging behind in the trade war, ministries have been invited to submit their policies and incentive structures to Invest India, the country's foreign investment promotion agency. Nine sectors, including electronics, automotive, pharmaceuticals and telecommunications, will be targeted.

According to the document, the government will meet companies between August 26 and September 5 to suggest the best areas of investment for their operations. State governments will also participate.

A "comprehensive package" detailing the market factors and proposed Indian incentives will then be prepared to be presented to potential investors, according to the government's report on the Aug. 14 meeting reviewed by Reuters.

Apple, Wistron, Pegatron and Foxconn have not responded to a request for comment.

It is unclear whether the government will distribute new incentives or merely detail the existing incentives, but the paper shows that India wants to explore opportunities and act quickly, even as some fear not to have succeeded.

As companies plan to rebuild their supply chains outside of China, a major global production hub, countries like Vietnam have become prime destinations given the speed of their customs clearances and stability of their policies, industry experts said.

Google's Alphabet Inc. is moving its Pixel smartphone production to Vietnam from China starting this year, the business daily Nikkei reported on Wednesday.

"There is another monster country that has a huge domestic market, India, but it has to get moving," said Richard Rossow, an American Indian specialist at Washington's Center for Strategic and International Studies.

"There is no time to lose to catch this new wave and the question is: have they ever missed it?"

BENEFIT FROM THE WAR OF RATES

The Sino-US trade war has also shaken global supply chains and affected major automakers.

Indian officials met this week separately with local representatives of automakers, including Volkswagen, Hyundai Motor Co and Honda Motor Co, to see if they are considering transferring some operations from China's supply chain to India, according to the report. source and a sector official who attended the meeting.

"The government sees this as an excellent opportunity," said the industry official.

Honda declined to comment, while Volkswagen and Hyundai did not respond to Reuters' request.

The protracted commercial conflict has also rocked Apple, which faces 15% levies imposed by the US administration on the main products made in China, such as smartwatches on September 1, with a tariff on its iPhone coming in. December 15th.

India is the world's second largest market for smartphones with considerable growth potential. However, while Foxconn, which assembles Apple phones in India, has strengthened its presence in India, leaders such as China are offering a more skilled workforce and a more organized component ecosystem.

A senior smartphone industry official in India said that future business investment decisions would depend primarily on a country's ability to provide political stability and faster permissions.

"In the end, Vietnam is a small country and it is not possible to develop multi-level and large-scale supply chain capabilities," said the executive.

The Indian government will also share a list of foreign companies with its consulates, which will be responsible for setting up meetings with companies at their headquarters.

"This exercise should start with Chinese companies based in China and end by September 15, 2019, including one-on-one meetings," the document says.