US investment in India is increasing with electronics, IT, agritech, and pharmaceuticals big areas of interest for US investors.
American businesses are increasingly looking at India as an alternative to China for the sourcing and export manufacturing of products destined to be resold onto the US market. Despite the difficulties caused by the COVID-19 outbreak, is having a record year in revenues from American clients. Part of this is spill over from 2019, but it remains true that in the face of continuing unpredictability in US relations with China, India is taking up part of the China alternative mix.
India position as a supply chain solution to over-exposure of US businesses to China. In particular, five-year jump in India of ease of doing business, and the steady lowering of tax rates, unification of incentive schemes, easing of SEZ restrictions, and so on. Additionally, the US-India political situation and the independent judiciary works as positives for India.
From the manufacturing side, electronics, pharma, textiles, and some agritech and medical devices are off particular interest for US organisations. IT opportunities, such as software development outsourcing and then obviously BPO were featured, with particular emphasis on Tier 2 and 3 cities for IT.
Additional interest presented for mobile, apps, and e-commerce due to the recent US bans on Chinese apps. US SMEs should take advantage of the start-up ecosystem fostered in Tier 1 Indian cities to develop replacement solutions for the Indian market, while the big MNC players can look to partnerships with others for JV opportunities.
US firms have been long engaged in India but also lagged behind opportunities because of a general preference for China. Recent troubles with China and the recognition of a need for diversification should push US firms closer to serious considerations in India.