India is looking at offering incentives to attract companies moving out of China amid the ongoing trade war with the US. Investments by Chinese companies can flow into smart phones and components manufacturing, consumer appliances, electric vehicles and parts, and daily use items like bed linen and kitchenware, 95 per cent of which are currently imported from China.

Financial incentives such as preferential tax rates and the tax holiday provided by Vietnam to lure companies are among measures being considered. Industries identified for incentives include electronics, consumer appliances, electric vehicles, footwear and toys. Other measures include setting up affordable industrial zones across India’s coastline and giving preference to local manufacturers in government procurement as an incentive to win over companies looking for an alternative production base.

The plan will help grow India’s manufacturing base and aid the Make in India initiative, which aims to boost manufacturing to 25 per cent of the economy by 2020. Doing that will help India narrow its huge trade deficit with China, its largest commercial partner. Economies, including Vietnam and Malaysia, have benefited from businesses trying to sidestep tariffs, while India has largely missed out on any investment gains. India’s effort is part of a larger plan to cut reliance on imports, while boosting exports.