India’s Quest to Lead Asian Manufacturing Faces Tax and Supply Chain Barriers in Rivalry with Vietnam

India’s aspiration to dominate Asia’s manufacturing landscape amidst the global shift away from China encounters formidable challenges, primarily revolving around tax intricacies and supply chain deficiencies. As the Biden administration champions the “friendshoring” strategy, spotlighting Vietnam and India as prime alternatives, India grapples with complexities hindering its progress.

Despite the warming relations between India and the U.S., Vietnam’s entrenched trade agreements and business-friendly environment confer upon it a competitive advantage. The simplicity of Vietnam’s regulatory framework stands in stark contrast to India’s labyrinthine system, compounded by differing policies across its 29 states.

Moreover, Vietnam’s established prowess in electronics manufacturing poses a significant hurdle for India to overcome. While India is increasingly attracting investment from tech giants like Apple and Google, it must address tax reform and streamline its supply chain to effectively challenge Vietnam’s dominance.

The emergence of Vietnam as a manufacturing powerhouse, coupled with its economies of scale and manual labor-driven production, accentuates the urgency for India to accelerate its efforts. Despite the challenges, India’s commitment to lower taxes and enhance supply chain efficiency underscores its determination to dethrone Vietnam.

In the dynamic landscape of Asian manufacturing, the rivalry between India and Vietnam promises to shape the region’s economic trajectory, with profound implications for global commerce and strategic partnerships.