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India to build manufacturing hubs in Asean countries

India wants to build manufacturing hubs in the four countries of Cambodia, Laos, Myanmar and Vietnam. Private companies will be helped in establishing a presence in these four countries and regional value chains.

These countries have the Generalized Scheme of Preferences (GSP) facility through which they have low or no duty on their exports to developed countries. So India is interested in creating manufacturing hubs, especially textiles, in countries like Vietnam. If Indian manufacturers go to these countries and produce, they will be able to utilize the GSP benefits to get market access to the developed countries.

The government cleared a Rs 500 crores project in August 2016 for exploring such opportunities. India does enjoy GSP benefits in certain sectors but the United States and European Union have been threatening to end India’s GSP benefits, given its rising share in world exports.

India’s exports to these four countries increased by more than eight-fold in 2015 compared to 2005. This accounted for a 24.3 per cent share in India’s exports to the Asean region. Imports, on the other hand, increased nearly six-fold from 2005 to 2015, accounting for a 9.4 per cent share in India’s imports from the Asean region.