Dell currently does about $25B USD in business in China.  It could soon pull the plug on that business and move it to India, according to Indian Prime Minister Manmohan Singh, who spoke with the Hindustan Times.

The Indian newspaper quotes India's PM as stating, "This morning I met the chairman of Dell Corporation. He informed me that they are buying equipment and parts worth $25 billion from China. They would like to shift to safer environment with climate conducive to enterprise with security of legal system."

Michael Dell was in India this week, meeting with Indian officials.  Dell already has one plant in India.

Some are speculating that Dell is alarmed by the Chinese government's response to Google -- who uncensored its Chinese search results on Monday.  The Chinese government is accusing Google of espionage and trying to force it out of the country.  Dell enjoys a close relationship with Google and is preparing to launch an Android handset (which will likely be banned from China).

Dell also is likely concerned about the rash of cyberattacks that China has cast a blind eye to.  Some, though, says that Dell is merely trying to play China and India to get the most favorable deal possible in terms of taxes, land, etc.

A decision to move its Chinese business to India would certainly rock the global economy.  With the exit of Dell and Google, others might be tempted to similarly jump ship.  That could have a huge impact on the growing economies of China, and its neighbor India.

Some American firms, though, have stated that they have no intention to leave China.  Microsoft says it opposes Chinese censorship, yet it continues to cooperate with Chinese officials in censoring its search, unwilling to take a strong stand against the policy.  Dell's rival Apple also continues to be very ardent about doing business in China, despite its struggles to sell its pricey products there.

Update: Mar. 24, 2010 12:15 p.m.

The news that Dell might pull out of China, covered first by the Hindustan Times and Engadget appears inaccurate.  We received a comment from David Frink, senior manager of Dell Corporate Affairs.  Mr. Frink says that there are no immediate plans to pull out of China.  He states:

[There is] a misunderstanding of what Mr. Dell and the Prime Minister discussed. In fact, Mr.Dell met with Prime Minister Singh to discuss ways of building India's hardware manufacturing eco-system. In this context, Mr. Dell said that the company spends approximately $25 billion annually on sourcing components from its suppliers in China. With the right kind of progress, Mr. Dell believes that India also has an opportunity of becoming a hardware manufacturing hub, generating employment and adding to the country's impressive growth. Dell HAS NOT made any plans to shift its component spend at this time.

Nonetheless, Dell may be disallowed to sell its new Android handsets in China later this year, which ironically may (in part) be manufactured in China.