India is giving major competition to China in manufacturing

Chinese telecom giant Huawei is going to ‘Make in India’ soon and this is already sending jitters to China.

The local Chinese media stated the Dragon nation should be worried and consider Huawei moving to India for manufacturing as red flags.

An article in China-run Global Times, it was stated Beijing needs to stress over job cuts as the production base of the company is shifting to India and also because of the increasing rivalry among the two countries.

According to an article, China should worry about the effects of industrial transfer to India on production change.

"As Chinese manufacturers show an increasing interest in setting up assembly lines in India, the economic competition between the two countries is likely to enter a new stage as India and China vie to expand their industry chains," the article said.

"In recent years, countless Chinese companies have been included into the production chain for smartphone vendors. It is difficult to accurately determine how many Chinese workers are involved in the production chain, but what is clear is that all those workers face potential job cuts if smartphone vendors transfer the whole industrial chain of mobile production from China to India," the report further added.

The report also said that China can’t afford this and the country needs to ensure its competitiveness in production chains or else India will become the new processing base for manufacturers.

This however, would require the vendors in China to maintain a technological advantage through continuous innovations.

Another article said that Chinese investors must look into India’s company and labour laws before investing.

"India's relatively stable political environment, sustained economic growth momentum, huge population dividend and cheap labour costs have attracted numerous international investors," the report said.

India has been ranked as the most preferred destination for future investment in 2014 according to a survey by Japan Bank for International Cooperation.

"However, India was not among the 13 countries which received direct investment from China exceeding one billion in 2015 and China's investment in India only accounted for 2.2 per cent of the total USD 39.3 billion foreign direct investment received by India in 2015," it said.

With Chinese investors coming to India, the Chinese government need to rationally asses the political and economic risks of investing in India.