The United States, Australia, India and Japan have held their first meeting of the Quadrilateral Security Dialogue in March this year, showing the new US administration’s support for a grouping China has criticised as a “clique” that could start a new Cold War.

On the other side, the novel COVID-19 is infecting millions of people across the world and China is facing an unprecedented global backlash that could destabilise its reign as the world’s factory of choice.

With the upcoming Quad Summit in the United States, India, its neighbour, has sensed an opportunity in this situation, and is keen to make inroads to a space it hopes China will vacate sooner rather than later.

For India, China’s weakened global position is a “blessing in disguise” to attract more investment, transport minister Nitin Gadkari said in a recent interview. The northern state of Uttar Pradesh, which has a population the size of Brazil, is already forming an economic task force to attract firms keen to ditch China.

Also read: What is Quad and why is it important for India

According to Bloomberg, India is also preparing the land twice the size of Luxembourg to offer companies that want to move manufacturing out of China, and has reached out to 1,000 American multinationals.

Here are a few spotlights about why India is the best destination to replace China as the next global manufacturing hub.

India has a large market:

According to the World Economic Forum, it is said that India will be the third largest consumer market by 2025, just behind the US and China. In the report, it was said, “India’s top 40 cities will form a USD 1.5 trillion opportunity by 2030, many thousands of small urban towns will also drive an equally large spend in aggregate. In parallel, there will be an opportunity to unlock nearly US$1.2 trillion of spending in developed rural areas by improving infrastructure and providing access to organized and online retail.”

Also read: Will India-US’ China tensions take centre-stage at Quad Summit?

Growth in digital connectivity, infrastructure development, coupled with rising household incomes and an increase in India’s consumer spending represent massive opportunities that lie in the Indian market.

Tax rate of corporate:

The Indian government, to encourage investment in the manufacturing sector, has taken proactive steps, including offering competitive tax rates.

Also read: Quad Summit: What to expect from the diplomatic event

In 2020, the corporate tax rate was reduced in India for the first time in three decades, and the manufacturing sector benefited the most from the slashed taxation rate.

For manufacturing firms incorporated after October 1, 2019, and beginning operations before March 31, 2023, the corporate tax rate has been slashed from 25 percent to 15 percent (this will amount to an effective tax rate at nearly 17 percent, including surcharge and cess).

Boost in domestic manufacture:

Under the ‘Make in India’ initiative that encourages companies to manufacture their products in India, the government announced several incentives for foreign firms looking to set up in the country.

Also read: Modi in US: Who are the 5 CEOs Indian PM will meet to attract investment?

Earlier, it was announced that about US$6 billion is now allocated to boost domestic manufacturing – to attract investment, incentivize local electronics and components manufacturing, and export-based production in the country.

Firms in China are in talks with India:

Presently, around 1,000 foreign firms are engaged in conversations with Indian authorities, and at least 300 are actively pursuing production plans in India. This includes sectors such as smartphones, electronics, medical devices, textiles, and synthetic fabric.

With this, the government is expected to focus its efforts on reducing the cost of production and manufacturing to attract foreign firms in India.