Why companies in China may not make a beeline to India: Beijing based journalist’s reality check

Dake Kang, a Korean American, works in the Beijing Bureau of the news agency Associated Press. He took to Twitter this week to explain why he is not yet convinced that companies from China would shift overnight to India for manufacturing in the wake of the pandemic and global tension between China and the US.

He puts in a caveat too. The weaknesses of India, he feels, are also its strength and goes on to cite the judiciary, which on the one hand slows down development and investment while on the other hand defends the rights of the poor. With a caveat from our side that he may be slightly out of touch, here is what he shared:

I was once an intern reporting for the Times of India in Delhi, and went to a Korea-India FDI conference (because of course what else do you do with the Korean American intern).

There I met a POSCO rep who had struggled to get land for a steel plant for nearly a decade. An Indian state signed an MOU with POSCO in 2005 for a plant but didn’t have any land. POSCO spent the next decade in legal, media battles over land with villagers, politicians, betel nut farmers, scheduled castes, the local Communist Party (before pulling out of the project in 2017).

The same year I knew someone who worked for the Delhi-Mumbai Industrial Corridor. The DMIC, as they call it, envisioned a highspeed rail link between Delhi and Mumbai slicing through 24 special industrial zones. Make in India! High tech! Smart cities! Sounds great right?

Well, I visited the office one day. As I recall, maybe a few dozen people in cubicles around a conference table, in a wing of a tony Delhi hotel. “So, where’s everyone else?” I asked. “This is it!” I was told. A few dozen. For the most ambitious industrial project in India.

These few brave souls were grappling with massive land acquisition issues from Maharashtra to Haryana. Legal battles. Recalcitrant villagers. Courthouses with decades-old cases rotting and gathering dust. The DMIC launched in 2006. Now, nearly 15 years later, it has little to show for it. There are no smart cities. There aren’t many investors. The backbone of the project, the Railway, started construction years behind of schedule and still won’t be done for years to come...

Now Modi officials seem to be losing interest, a decade after hyping this as “the world’s largest infrastructure project”. That, friends, is why I am skeptical of Delhi’s efforts to claim China’s crown as king of manufacturing. Before, during, or after this COVID-19 pandemic. Don’t buy too much into decoupling hype.

Yes, some see this pandemic as a chance to decouple from China. But it’s one thing for politicians to say this - another for businesses to leave. China offers world-class infrastructure at a price that can’t be beaten. That hasn’t changed.

Lest anyone think I’m being dour on India here, let me state for the record that anyone who knows me knows that I love India. It’s one of the liveliest, most exciting, vibrant and just plain beautiful places in the world. Not everything can be measured in trade figures and GDP!

Don't forget - India's weaknesses are also its strengths. The same judiciary that hampers development also defends the rights of poor farmers from being trampled on - unlike in China, where millions were tossed from their homes to make way for malls, dams & highways.

(Compiled from the Twitter thread of DakeKang)