Factory riot in India diminishes investors' confidence

By Tom Fowdy
0 Comment(s)Print E-mail China.org.cn, December 23, 2020
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A pedestrian walks past an Apple store on Fifth Avenue of New York City, the United States, June 17, 2020. [Photo/Xinhua]

On Dec. 12, employees of an iPhone manufacturing plant in India's southern state of Karnataka protested over alleged labor rights infringements, poor working conditions and unpaid wages, causing over $7 million worth of damage. 

The riot has undoubtedly diminished the number of investors considering starting or expanding their operations in the country and tarnished India's bid to present itself as a new player in global supply chains.

There is no question that India has enormous economic potential and will be one of the major economies of the future given its huge population. 

However, a global supply chain powerhouse needs the support of integrated infrastructure, including extensive sea ports, airports, roads, reliable railways and energy connectivity, all of which India is currently lagging far behind China – the country India has anointed as its "peer competitor."

In addition, 68.8% of Indian people live below the internationally defined poverty line of $2 a day, showing that the country's development is hindered by extreme inequality and an uneven distribution of basic resources. 

Likewise, the iPhone plant riots as well as heavy protests in New Delhi show that the country is prone to political instability, uncertainty and turbulence, with a far greater tendency for potential violence. This creates risks for investors. Even for those who are willing to start a business there, they are unlikely to make the country their only or primary destination. 

Some international companies also fear that India is utilizing "economic nationalism" in light of the COVID-19 pandemic to transform its economic fortunes and accelerate its development. 

Nationalism and protectionism have proven sufficient distractions from the country's struggles against the pandemic and its economic woes, but are nonetheless unrealistic and misleading solutions to India's aim of becoming a globally viable hub for manufacturing supply chains.

Things are always easier said than done. As an important and emerging market, India, after overcoming COVID-19, will grow and become one of the world's largest economies in the long term. However, convenient infrastructure facilities, a favorable business environment and political stability are the critical factors that investors really care about.

Tom Fowdy is a British political and international relations analyst and a graduate of Durham and Oxford universities. He writes on topics pertaining to China, the DPRK, Britain and the U.S. For more information please visit: 

http://www.china.org.cn/opinion/TomFowdy.htm

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