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India can seize manufacturing opportunity amid US-China row: Mark Mobius

Venkatesh Ganesh Mumbai | Updated on May 25, 2020 Published on May 25, 2020

Mark Mobius   -  Bloomberg

Mark Mobius believes that there is a big opportunity for India in the manufacturing sector given souring US-China trade relations.

Businesses are thinking of diversifying to India as a manufacturing base as a part of their business continuity plans, said Mobius. India stands to benefit, provided the conditions are suitable, and the labour regulations and other regulatory changes the government is planning to introduce take shape, he added.

The founder of Mobius Capital Partners, regarded as the father of emerging markets, said this at a ‘virtual fireside chat’ with angel investor and venture capitalist Kapil Khandelwal. The event, organised by EquNev Capital, Toro Finserve, UnoLigo and Microsoft, was attended by fund managers, bankers, industry executives, lawyers, chartered accountants and academia.

Advantage India

There is opportunity for India to move into manufacturing outsourcing, as it has the advantages of resource and low-cost labour, said Mobius. “This conflict (US-China) is positive; India benefits from it,” he said.

The Indian government’s recently announced production-linked incentive (PLI) policies in manufacturing would provide a boost, he added.

Mobius is betting on sectors such as healthcare (pharma, hospitals), education, IT companies, manufacturing and related infrastructure. Sectors that are fast transforming their business models to digital are going to recover quickly and grow faster, he predicted.

“The sectors in India that have already moved into digital transformation of their business models will do better in recovery,” he said.

Learn from Sweden

Mobius is of the view that India can learn from Sweden, where social distancing was enforced at workplaces rather than going for a lockdown, which impacts economic growth. Covid-19 cases in places like Mumbai have shown no signs of abating despite a lockdown, he added.

“India and some other emerging markets have not carefully considered alternatives to manage the economy and industry, balancing the epidemic risks,” he said.

In this backdrop, Mobius believes that businesses with good cash flows will do well. “Companies which were already struggling should not be allowed to continue and doled out packages. Those doing well already should be supported even though politically it maybe difficult to do so,” he said.

Infrastructure push

Further, in order to revive the Indian economy, an infrastructure push must be made to generate jobs and in turn kickstart the economy, said Mobius. Joint ventures with the private sector are needed, including global tie-ups, he said.

Published on May 25, 2020
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