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CORPORATESTRATEGY


AChina+1opportunity I


VIEWFROMTHEC-SUITE


THE CEO OF MAHINDRA WORLD CITIES SEES OPPORTUNITIES IN CLIENTS RELOCATING FROM CHINA, HE TELLS JACOPO DETTONI


ndia has long tried to erode China’s status at the heart of global value chains, with mixed results. Then Covid-19 hit, unveiling


an extreme dependence on China and giving companies compelling reasons tomove out of the country—or at least diversify their produc- tion matrix. “Covid-19 has hadimplications on global and


regional supply chains,” Arvind Subramanian, the chief executive of Mahindra Lifespaces, the property development armof the Indian con- glomerate, tells fDi.“We are already getting enquiries fromcompanies in China thinking of facilities outside the country.”


Make in India Over the past two decades, Indian governments have repeatedly tried to foster a renaissance of the country’smanufacturing industry, and the current prime minister Narendra Modi is no exception. Mr Modi launched initiatives like Make in India, aimed at promoting the coun- try as a manufacturing hub for the fast-grow- ing domestic market, but also for exports bound to the regional and global markets. Results have been mixed, however. As high-


lighted by a report by consultancy McKinsey, manufacturing generated 17.4%of India’sGDP in fiscal year 2020, little more than the 15.3% it generated in 2000. By comparison, Vietnam’s manufacturing sector more than doubled its share ofGDP during the same interval, accord- ing to McKinsey’s analysts. Notwithstanding its potential, India


remains a land of challenges. Despite great improvement in the past years, India still lags far behind China for ease of doing business, according to theWorld Bank.


Plug-and-play Companies like Mahindra Lifespace Developers are turning that challenge into an opportunity. “Our plug-and-play infrastructure is a big


draw for any company that chooses to stay with us,” Mr Subramanian says. The company launched its first Mahindra


World City in Chennai in 2002—a township integrating residential, commercial and indus- trial offers in one masterplant. It doubled downa fewyears later withWorld City Jaipur. More recently, the company bet on a


smaller, industrial-specific format, ‘Origins’, which it unveiled in 2017. Since then, two Origins parks have opened doors in Chennai and Ahmedabad. The company is nowacquir- ing land in Maharashtra for a third industrial park to launch in two years’ timewhile also scoping locations for another two parks down the line, Mr Subramanian confirms. While it takes two to three years for inves-


tors to acquire the land for a new site and clear all the bureaucratic hurdles to start construc- tions and, eventually, operations, Mr Subramanian claims his his company “guaran- tees speed tomarket” bringing downthe ini- tial set-up to nine or 10 months.


Onthemove The company has been fielding calls from Taiwanese and Japanese prospective clients as Covid-19 exposed existing fragilities in global value chains that heavily rely on Chineseman- ufacturing, Mr Subramanian says. “[The pandemic] opened up further oppor-


tunities for investment in ourWorld Cities and Origins industrial parks as investors are look- ing at expanding their local footprint and having a second facility outside China.” The Indian government has been pro-


actively approaching companies consider- ing a shift out of China; the country’s minister for IT and Communications, Ravi Shankar Prasad, said that Apple shifted nine of its 11 iPhone manufacturing units out of China into India, according to local press reports on November 26. Companies are on themove.


Indian developers of the likes of Mahindra Lifespaces are also on the move tomake the most of this titanic shift sparked by Covid-19.■


OURPLUG-AND-PLAY INFRASTRUCTURE ISABIG DRAWFORANYCOMPANY THATCHOOSES TO STAY WITHUS


December 2020/January 2021 www.fDiIntelligence.com CURRICULUMVITAE


ARVIND SUBRAMANIAN


2020 Mahindra Lifespaces CEO


Previously Lodha, regional chief executive; Boston Consulting Group, managing director


GLOBALOUTLOOK


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