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Flex Warns to Exit India Following Unease of Doing Business

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Flex’s decision to exit India and move to Malaysia shows the country’s unease around the ease of doing business in the electronics industry

American electronics manufacturing major, Flex has expressed its plan to exit India if its request for sourcing out duty-free products from another facility within the special economic zone (SEZ) located in the same area is not granted.

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The company has a manufacturing unit in Sriperumbudur in Tamil Nadu which it has announced to shift to Malaysia following unease of doing business in the country. Earlier, in August, Flex had requested the government for duty relaxation for six months. While it has garnered the required support from the state information technology and commerce ministries, the finance ministry’s response is awaited.

Flex’s issue

In its letter addressed to the ministry, it had mentioned that it needed a duty-relaxation to supply an annual bulk order of 96 million mobile devices by an Indian company. It had also requested for a 20 per cent customs duty waiving.

Investment plans

The electronics manufacturer had plans to invest around$200 million on its second unit in Andhra Pradesh after the six months relaxation period. Flex informed that the facility would generate around 5000 training opportunities in the state, which would further accelerate the manufacturing sector. The investment plan would also complement the ‘Make in India’ scheme to cut down the imports and take India’s digital vision forward.

Ease of doing business

The government of India has been introducing schemes to boost the ease of doing business in India. Over the years, it has been offering incentives and other assistance to support manufacturers and ensured that these efforts draw global investments to the country. India ranks 100th in the list of 190 countries in ease of doing business index released by World Bank’s Doing Business Report 2018.

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