Answer No.

2
Ans2. The comparative study of economic backgrounds and policies entail analysis of domestic
demand potential, the capabilities of the local supply chain, the business environment and
government incentives, and the management culture etc.
Market demand potential is a function of population and income levels. According to the GDP
per capita rate both India and Vietnam started at $1300s in 2010 but over the years India has
superseded in growth to around $2000 in 2017 as against mid $1800s for Vietnam.
Culture Analysis
People in different states in India speaking different languages contributes to different cultures,
which makes business management difficult. The de-monetization in 2016 and the launch of GST
in 2017 marked the start line of reform and opening up for India. And it’s expected that India will
replicate the fast grow of China after its reform and opening up within the 1990s. Vietnam is
homogenic and densely packed region with lesser number of cultures making it relatively easy for
management.
Economic View
Vietnam thrives on its lower labor costs than that in China and the concern over the trade war
between the US and China. Vietnam is a lucrative destination for foreign companies, considering
its demographics, wages and electricity cost. The country was ranked the simplest among seven
emerging Asian countries as manufacturing destinations by Natixis SA. Further, with its labor-
focused policies, relaxed trade policies, Vietnam favors foreign companies.
India, to its credit, relaxed FDI norms recently, opening up plethora of business opportunities for
single-brand retailers. India announced ease of operation for Single Brand Retail, in order to
provide a kick start for the slowing economy. The government’s move is predicted to portray
India a more attractive marketplace for foreign retailers.
The ease of doing business index for Vietnam is at 69 in 2019. This is against India's rank of 77.
India has lagged behind due to heavy paperwork and land issues. Vietnam has maintained a
consistent GDP growth of more than 6% since 2000.

India's mobile production has gone all the way down to a worth of US$2.5 billion in 2019,
whereas Vietnam's production of phones has gone up to a staggering $49 billion in 2018. The
improved performance of Vietnam has not been limited to mobile phones; it's generally excelled
in production of all electronic items.
Government Policies
Key attraction for business in Vietnam is corporate tax rate for large firms that are looking to
relocate. A few large firms in Vietnam have managed to optimize tax rates as low as zero for the
initial five years, 5% for subsequent decade and 10% for the subsequent next two. Against that,
India's tax rates for a foreign firm could be as high as 43%.
International Standing
Vietnam is about to get to apply for a non-permanent seat within the UN Security Council for the
2020-2021 term, and she also will function the chair for Asean in 2020. She will be the first chair
after the adoption of Asean's outlook paper on the Indo-Pacific.
Given the prime position of India within the Indo-Pacific region, its security and stability would
be important for all countries within the region.
Consumer Durables Industry
Vietnam's consumer electronics market; generally characterized by computing devices, mobile
phones, audio and video and gaming products, was US$ 8.9 billion by 2016, driven by growing
affordability of key products. The electronics devices market is expected to grow at CAGR of
14%. Vietnam’s vast, under penetrated rural market offers the most growth potential, with Hanoi
and Ho Chi Minh City accounting for most sales.
India
The appliances and consumer electronics industry are expected to grow 100percent to Rs 1.48
lakh crore by 2024-25, according to a report by CII.
The market is expected to see growth on account of higher rural consumption, reducing
replacement cycles, increasing penetration of retail, a wide-assortments at various prices and
credit options.
Current Market Size in 2018-19 was Rs 76,400 crore in 2018-19, in which Rs 32,200 crore was
contributed from domestic manufacturing, according to the joint report by CEAMA and Frost &
Sullivan.
The TV market is expected to grow to 284 lakh units in 2024-25 from 175 lakh units in 2018-19
and washing machines to be at 126 lakh units from 70 lakh units of 2018-19.
Challenges: logistics, finance cost and lacks a proper ecosystem, free-trade agreements are also
becoming an issue to the ACE industry. Goods and services tax on ACs as well as on TV panels
above 32 inch is huge 28%.

New Policies:
Cabinet has approved the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme for
development of world class infrastructure along with common facilities and amenities through
Electronics Manufacturing Clusters (EMCs) that will help India to become the mobile
manufacturing hub in the world.
Currently, 85 per cent of the worldwide mobile exports is catered to by two countries - China and
Vietnam. Further, only three global ecosystems - Samsung, Apple and therefore the Chinese
majors like Oppo, Vivo, Xiaomi and Huawei, dominate the multi-billion-dollar mobile export.
In the previous couple of years, the govt has launched a slew of schemes to fuel local
manufacturing of electronic goods. These include Phased Manufacturing Programme for mobile
handsets and related sub-assemblies/components manufacturing, National Policy on Electronics
2019, Electronics Manufacturing Clusters scheme and Modified Special Incentive Package
Scheme. Some countervailing duties were also announced to discourage imports of electronic
goods.
Rise of INDIA
 India has become the 2nd largest producer of mobile phones, replacing Vietnam. Notably, we
reckon that internet value add is merely within the high single-digits at the present, since most of
components of mobile phones are imported, and only assembling takes place in India.
My conclusion is that India must be chosen for investment in manufacturing consumer durables
as setting up micro production facilities at competitive costs and lucrative government incentives
in a heavy market demand potential country already served by Xiaomi, One Plus, Samsung, Oppo
and Vivo etc. will be beneficial for the company.