The Sri City Industrial hub in Andhra Pradesh is making toys to be exported to the United States. But the toys are not being manufactured for Indian companies; they are for Chinese.
This industrial zone is manufacturing various accessories for Chinese companies numbering around 100.
They are coming in droves because of the huge subsidy they would receive for manufacturing in India under the ‘Make in India’ campaign.
Recently, Union Minister Ravi Shankar Prasad said, “If you invest Rs.100 then the government will be contributing Rs.25. And there will be further subsidies too.”
Ravindra Sannareddi, the founder of the industrial zone told BBC that the concessions made India a preferred place for Chinese companies.
The second advantage is the generation of jobs through this zone. There is no shortage of labour, as Sannareddi himself claim that around two lakh employable youth live in the villages around the zone.
Pals Plush, a company manufacturing toys for Universal Studios, Pottery Barn Kids and Wal-Mart, employs a huge women workforce.
Nearly 80 percent of the factory workers are women, says the company’s director Seema Nehra.
The abundance of cheap and young labour force in India makes the country the hottest destination for manufacturers.
Due to its population growth rate, India will continue to have the largest workforce population below the age of 30 for decades.
BBC estimates that this could be a reason why Foxconn, the Taiwanese company that manufactures Apple phones, has decided to invest $20 billion in India and open 10 factories.
Last year top smartphone makers such as Xiaomi, OnePlus, Lenovo, Gionee and Asus announced investments in India.
Industry heads say that manufacturing in India saves time. Importing of goods takes approximately four to five weeks, whereas it comes down to two to three weeks when made in India.
A top Chinese manufacturing company, Xi’an Longi Silicon Materials Corporation, is the latest in a series of companies to have signed a memorandum of understanding to invest in India.
It will be investing $25 crore initially and has promised to invest six-times more at a later stage, which will create five thousand jobs.
The arrival of Chinese companies in India will translate to both investments and employment opportunities. By next decade, India will need to create 10 million job opportunities.
Why are Chinese companies looking at India? According to the World Bank, “Fast rising wages in China means that Chinese companies are now trying to go out and cash in on the occasion of India’s hope.”