India Lags In Leveraging China+1 Strategy

New Delhi: India has seen limited success so far in capturing the ‘China Plus One strategy’, while Vietnam, Thailand, Cambodia, and Malaysia have become bigger beneficiaries, according to a report of government think tank NITI Aayog.

It said that factors such as cheaper labour, simplified tax laws, lower tariffs and pro-activeness in signing Free Trade Agreements (FTAs) have played a critical role in helping these countries expand their export shares. The US has implemented stricter export controls and higher tariffs on Chinese goods to limit China’s growth and expenditure towards technological progress.

This has led to a fragmentation of global supply chains, prompting multinational corporations to seek alternatives to Chinese manufacturing. It said that India is seen as an attractive destination for companies looking to shift their manufacturing bases out of China and this shift offers the country a chance to enhance its domestic manufacturing capabilities, particularly in high-tech industries.

“However, India has seen limited success so far in capturing the China Plus One strategy so far,” said the report - ‘Trade Watch Quarterly’. In recent years, it said, India’s share in global trade has fallen for labour-intensive sectors despite significant endowment.