(Yicai Global) Aug. 25 -- News that Foxconn Group's new plant in Maharashtra, India, will go into operation in the second half of the year has triggered widespread panic among Chinese manufacturers.
Apart from Foxconn, a number of companies listed in mainland China are also ramping up investment in the South Asian country. XCMG Construction Machinery Co. has spent USD250 million to build an engineering machinery manufacturing base in Chennai, while Midea Group and Kaili Group have broken into the Indian household air-conditioning market with a joint investment of USD33 million.
China's labor costs are rising close to those in developed countries, prompting manufacturers to look for lower-cost markets. India may replace China as the world's manufacturing powerhouse due to its competitive labor force.
Other Chinese manufacturers are also looking to India. Kingsignal Technology Co. scaled up business operations with a USD3 million capital injection into its wholly owned Indian subsidiary. Hareon Solar Technology Co. has built a 172-megawatt solar power plant in partnership with an Indian partner. Beiqi Foton Motor Co. completed the third phase of capital injection of USD78 million into unit Foton Motor India Ltd.
In 2015, the Indian economy grew faster than China's for the first time, expanding at 7.57 percent (calculated at constant prices). In the first quarter of this year, India's gross domestic product gained 7.9 percent. The International Monetary Fund expects India's GDP growth to remain above 7 percent over the coming years.