Chalo China

Consider this: Microsoft invests some $ 75 million in India. But in China, the company invests ten times that amount--$ 750 million. That clearly indicates which way the wind is blowing as far as FDI is concerned.

Microsoft is not the only one. Recently, Intel announced its intention to invest $ 100 million in Shanghai to assemble Pentium 4 microprocessors. Dell has already moved its huge PC manufacturing unit from Kuala Lumpur in Malaysia to Xiamen in China. According to analysts, China is fast becoming a manufacturing superpower.

Amongst all the developing nations, China has always been the largest recipient of foreign investment. During the nineties decade, it got on an average $ 40 billion per year. And the turn of the century has not slowed down this momentum at all. The inflow of funds continues unabated.

If companies are preferring China over India, it is not without any reason. China's advantages are numerous. Its wage rates are less than five percent of Japan and the US. It has spent enormous amounts of money on building up infrastructure including roads, power, airports etc. In addition, the country itself is a huge market considering its population and size.

But the best part is the local governments which go all out to attract investment. Companies don't have to go to 20 different agencies for approval. For instance, when the Chinese Prime Minister was in Bangalore sometime back, Infosys chief NR Narayana Murthy expressed a desire to set up operations in China. He was given the approval then and there.

It is not only the central government in China which acts investor-friendly. The provincial governments are even more proactive. For instance, the provincial government of Shenzhen has announced that it will provide $ 5 billion to boost its integrated-circuit industry.

Basically, the critical mass of factories, subcontractors and specialized vendors has created a manufacturing environment with which it is extremely difficult for anybody to compete. In addition, China's investment in education and training is attracting research facilities from companies like IBM, Microsoft and Motorola.

So where does that leave India? Nowhere. It is left to salvage the crumbs. And this situation is only going to accelerate if the union government doesn't wake up and does some real and hard-thinking on how to attract a larger share of FDI. Otherwise, forget the MNCs, even the Indian companies--like Infosys is doing--will continue to march towards China.