last There has been turmoil in the whole world since the victory of Donald Trump in the presidential elections held in America last year. But this turmoil increased even more from the day Trump took oath as the US President. After winning the election on the promise of making America great again, Trump has started working on his promises. Trump’s strategy regarding the American manufacturing sector has increased the headache for many countries of the world, which are in the race to make themselves manufacturing hubs. Trump’s policies are sure to have a deep impact on India too.
Trump proposed 15 percent corporate tax rate to companies
Donald Trump has started working on the ‘Make in America’ strategy. He has simply threatened all the companies of all the countries. Trump has said that either set up your manufacturing plant in America or be prepared to pay heavy tariffs. At the World Economic Forum held in Davos, Trump proposed a 15 percent corporate tax rate for companies that will manufacture in America.
Companies will shy away from going to America
Talking about the last few decades, Asia remained on top in terms of global manufacturing. Especially, China won in this matter. Apart from China, many companies also set up their manufacturing plants in Vietnam, Indonesia and Malaysia. In China, Vietnam, Indonesia and Malaysia, not only electronics but also clothes and shoes started being manufactured on a large scale. But America is still at the top for chip manufacturing. Any company will avoid doing anything hasty by following Trump’s words because America’s labor rate is very high, which can lead to a huge decline in the profits of the companies.
How will Trump’s strategy affect Indian companies?
Indian manufacturing faces difficulties due to old technology, lack of consistency in quality and difficult regulations. India spends only 0.64% of its total GDP on research and development, hence India is far behind in innovation compared to other countries. Whereas China spends 2.4 percent of its GDP and America spends 3.5 percent on research and development. India’s logistics cost is 14-15% of GDP, which is expected to reduce to 9% as stipulated by the National Logistics Policy 2022. The PLI scheme of the Central Government is helping in improving manufacturing, but its speed is very slow.
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