Why manufacturers are not rushing into India, Indonesia

Singapore: Out of 56 companies that relocated their production out of China between April 2018 and August 2019, only three went to India and two to Indonesia. This was the finding of a study by Nomura, a Japanese financial group.
Out of the 56 firms, 26 relocated to Vietnam, 11 went to Taiwan and eight to Thailand.
As the ongoing trade dispute between China and the US continues to escalate, tariffs are making exports from China more and more expensive for US importers. Many firms have been doing their sums and looking for new locations to re-site their manufacturing operations.
For many companies, the plan to relocate has already existed for a while. Costs in China were already trending up for some time. However, many hesitated because of the hassle and uncertainty of relocation. What tipped the scales in the last year or so was the additional US tariffs levied on Chinese made goods.
Re-locating manufacturing facilities is not a trivial matter. Besides, overcoming the high initial set-up costs, other factors to consider are infrastructure, communications and connectivity. Having good and cost-effective warehousing, transportation and other logistical support is essential. That is just the start. There is also the challenge of finding the right skilled manpower and thereafter putting the new workers through training specific to their production process. Further considerations include governmental support, a favourable tax regime and legal framework, and the ease and speed of starting a business in a new country.
On the surface, India and Indonesia both have the ideal demographics to be global manufacturing powerhouses to rival China which at the moment makes one-fifth of the world’s goods. First of all, they have the second and fourth-largest populations in the world with India’s population expected to surpass China’s by 2030. They also have a relatively young population. United Nations estimates that India has a median age of 30, whereas Indonesia’s median age is 31. By comparison, China’s median age is 40.