Indian Prime Minister Narendra Modi’s address to Congress during his state visit to the United States this month grabbed as much headlines as his meeting with Tesla CEO Elon Musk. Modi is trying to woo Musk to set up a factory in India. Tesla has manufacturing plants in the US, China and Germany, and is on the hunt for a new location. Modi has competition—France, for instance. Musk has said Tesla will likely finalise a location to set up its India factory by the end of the year. If it comes to pass, this will be a major win for Modi, whose government has held talks with Musk for four years. Import duties, land acquisition and labour rights pose a challenge. But the lure is a 1.4-billion-people market.

Nepali political leaders can learn a thing or two from how Modi operates when he travels overseas. During his US visit this month, he also met with Sanjay Mehrotra, CEO of Micron, which plans to set up a new semiconductor testing and packaging unit in India, and with H Lawrence Culp Jr, CEO of General Electric, which is due to make jet engines in India for the Indian Air Force. These investments take years to come to fruition. It takes a patient leader to keep at it. During his 2017 US visit, Modi met with CEOs, including the iPhone maker Apple’s Tim Cook, urging them to invest in “business-friendly” India. In April this year, Cook inaugurated the first Indian store in Mumbai, followed soon by a second one in New Delhi.

Politics aside, India was fortunate to have Modi as prime minister as the nation was getting ready to shift to a higher gear. His penchant for business development goes back to his days as Chief Minister of Gujarat (2001-2014); he made obtaining tax breaks and land for businesses easier, even as special economic zones were created with weaker labour laws. This was a time when the Indian economy could hardly throw its weight around. At the turn of the century, India boasted less than $500 billion in nominal GDP, which reached $3.4 trillion last year to become the fifth-largest economy globally. Even then, it is not easy to attract foreign capital, which knows how to pit one nation against the other to extract better terms.

Global supply-chain rejiggering

An ongoing rejiggering in global supply chains offers massive opportunities for leaders like Modi. A few years after Mao Zedong passed away in 1976, with nominal GDP of only $154 billion, China, under visionary Deng Xiaoping, opened up to foreign investment in selected coastal cities in the south; special economic zones and industrial parks were offered with a focus on export-oriented manufacturing. For investors, China offered a potentially huge market. Labour was cheap, and under the one-party rule, government policy was stable. Foreign investment came pouring in. China today is called the world’s factory. Nominal GDP last year totalled $18.1 trillion, making it the second-largest economy after the US.

Arguably, China is becoming the victim of its own success. Labour is no longer cheap, particularly along the coast. Foreign companies face pressure to transfer technology. The rise of Donald Trump in American politics in 2016 turned the supply-chain dynamics on its head. In 2018, he levied tariffs on Chinese imports, and companies began to look for alternative sourcing locations. Then came China’s zero-Covid policy, which further pressured its clients to find a backup. Because of its close proximity to China and the availability of cheaper labour, Vietnam has taken the lion’s share of manufacturing away from China. Bangladesh and Malaysia, in the meantime, have benefited hugely in apparel manufacturing.

To be fair, China continues to dominate global manufacturing, but others are gaining share. India is one of them and wants to achieve more, with decent odds of succeeding. Modi’s “Make in India” initiative was launched just a few months after assuming premiership in 2014, yielding dividends. Foxconn, a Taiwanese contract manufacturer with operations at the world’s biggest iPhone factory in the Chinese city of Zhengzhou, just broke ground on a new factory in the Indian state of Telangana. Pegatron, another Apple supplier from Taiwan, already operates in India, with plans of expansion. Apple has its eyes on India’s growing middle class and is increasingly telling its suppliers to manufacture locally.

Tag along India’s success

With the right leadership and policy, Nepal can tag along India’s manufacturing success. Its physical proximity to India is an advantage, not to mention cheap—or cheaper—labour. With a population of 30 million and per capita income of $1,400, Nepal—a least developed country—makes up a small market. On Tesla’s radars, for instance, Nepal hardly registers as a lucrative market opportunity; nor does it offer top-notch professionals. For Foxconn or Pegatron, however, the dynamics are different. Their client Apple is telling them to diversify production away from China, and Apple will probably not mind if one of the hundreds of components that go into an iPhone is assembled in Nepal, sitting right next to India.

For that, Apple, just to pick a name, needs to be conveyed that an opportunity exists in Nepal. Indian states are falling over each other to compete for manufacturing that is diversifying away from China. Nepal, in this regard, is yet to put itself on the map. This is where political leadership comes in. As the saying goes, if you are thirsty, you go to the well. Or, dig the well before you are thirsty. We do not hear of Nepali prime ministers meeting with CEOs and industrialists when they are visiting overseas. Prime Minister Pushpa Kamal Dahal’s recent visit to India is a case in point. That is just not the custom. Modi is changing the culture in India. Nepali leaders need to emulate him. Ambassadors, too, can take the initiative.

The goal is not to go for a sixer right from the word go, rather get going by taking the ones and twos. With infrastructure the way it is, Nepal has limits and will have opportunities in low-end manufacturing/assembly. But this is how the likes of Singapore and Taiwan began their journey, and with time they moved up the supply chain into high-end manufacturing. The global reliance on China will not vanish overnight. It took decades to build out supply chains in that nation. It will take time to rebuild it elsewhere. But the global trend is toward finding alternatives, creating opportunities for new geographies. The question is if Dahal—or KP Sharma Oli and Sher Bahadur Deuba, for that matter—can tap into those.