In a bid to boost manufacturing and exports, the government is considering a comprehensive plan to provide foreign companies with incentives to set up their operations in India.
Accordingly, the strategic plan being considered by the Ministry of Commerce and Industry aims to attract companies leaving China owing to trade war concerns. However, ministry officials did not elicit comments on the plan.
Besides providing sops such as tax breaks, the plan envisages to set-up manufacturing hubs in the coastal areas of the country.
The plan, which still requires all mandatory approvals including from the Ministry of Finance, aims to even boost local manufacturing of items which are currently being imported.
Items such as electronics, automobile parts, pharmaceuticals and telecom equipment have been identified by the strategy paper.
Apart from boosting local manufacturing, the plan, if implemented, has the potential to reduce trade deficit with China by exporting goods to the country which were being imported from the US. India had a trade deficit of over $63 billion with China in 2017-18.
The plan assumes significance as the impasse continues to exist between the US and China over a trade deal, which the former claims will aide it in reducing trade deficit with the latter and allow greater market access for its products.
Amid the trade war, the US has imposed tariffs on import of products from China and has threatened to increase these levies in the future.
Presently, various southeast Asian nations are trying to woo companies fleeing China over trade war concerns.
"These ongoing retaliatory tariffs provide a window of opportunity for enhancing India's exports to China," the document read.
The plan has been circulated to various stakeholders.