India Vs China: The world’s leading companies are looking for an alternative to China for the global supply chain. And India seems to be getting a big benefit from this. The changes taking place in the global supply chain are bringing a golden opportunity for growth for many Asian countries, which will be led by India. Nomura has released a report regarding this, in which a survey has been conducted with 130 firms regarding China Plus One Strategy policy. According to this survey, global companies are looking for opportunities in other countries outside China for supply chain and in Asia, India will be the biggest beneficiary, followed by Vietnam and Malaysia.
Exports may almost double by 2030
Nomura’s Asian economist Sonal Verma, Aurodeep Nandi and Salon Mukherjee from India Research Team have prepared a report named Asia New Flying Geese. In this report, those sectors have been identified where maximum opportunities are going to be created for India. This includes electronics, automobile, capital goods, semiconductor (assembling, testing), energy (solar) and pharmaceuticals. According to Nomura, with an annual growth of 10 percent, India’s exports will reach $835 billion by 2030 from $431 billion in 2023.
Investment in India from America and developed countries
According to Nomura’s report, China’s role in the global value chain is changing. China is the largest investor and most of its investments are concentrated in ASEAN. Whereas investment in India is coming from developed Asian countries apart from America. Nomura said, there are impacts of equity investment in different sectors in many countries, but we are very excited about India and Malaysia. Nomura has advised investors to exercise patience in the short term, but fundamentally, a wider impact will be seen and many opportunities will be seen in the times to come.
PLI scheme will increase manufacturing
According to Nomura’s report, India is trying to revive its lagging manufacturing sector by creating the necessary ecosystem, for which the Production Linked Incentive scheme launched by the government is very important. The report said India jumped ahead with growth led by the services sector but lagged behind in seizing the low-cost labour-incentivized manufacturing opportunities that China and other Asian countries have taken advantage of.
Focus on increasing electronics production
According to the report, electronics production in India has been worth $101 billion in the financial year 2022-23, which contributes only 3 percent to the GDP. Whereas in other Asian countries it contributes 7 to 18 percent of GDP. But the promotion being given by the government through the PLI scheme as well as the emphasis on reducing dependence on imports from China, cheaper labor compared to other Asian countries and the domestic market for consumption will make a big contribution in increasing electronics production in the long run.
These sectors will benefit
Nomura said in its report that the policy emphasis being given on manufacturing and reallocation of supply chain can accelerate the economic development of the country, so there will be a jump in the earnings of corporates in the medium term. According to the report, progress is being seen in India’s electronics and semiconductors sectors in which the world’s leading companies are present. India’s automobile sector wants to take advantage in the field of EV. By the way, India is already an auto manufacturing hub. Solar energy will leave all other energy sources behind in terms of capacity in the coming decade. Manufacturing in India is being continuously promoted to reduce dependence on China for raw materials in the pharma sector. Defense and industrial production in which domestic manufacturing is being promoted instead of imports under Self-reliant India and the private sector is also participating in it.
Nomura likes these stocks
Considering all these sectors and the stocks present in them, Nomura likes the stocks of Reliance Industries, Bharat Electronics, Exide, Sona BLW and Unominda.
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