Capitalizing on 'China Plus One' Strategy for Economic Growth

 India aims to capitalize on the 'China Plus One' strategy for economic growth, with the goal of becoming the world's third-largest economy. Despite challenges outlined in the Economic Survey 2023-24, India plans to prioritize foreign direct investment (FDI) from China over trade integration to boost exports to the United States. By reducing dependency on Chinese imports, attracting investments, and focusing on skill development, India seeks to solidify its position in the global economy and achieve its ambitious 'Viksit Bharat' goal by 2047.

Economic Survey 2023-24: India has the potential to gain from the 'China plus one' approach

India Aims to Leverage 'China Plus One' Strategy for Economic Growth

India, currently the world's fifth-largest economy, has set its sights on becoming the third-largest economy in the near future. One strategy that India is looking to benefit from is the 'China Plus One' approach. However, the journey towards achieving India's ambitious goal of 'Viksit Bharat' by 2047 is expected to be challenging, as outlined in the recently tabled Economic Survey 2023-24 by Finance Minister Nirmala Sitharaman.

The survey highlights significant changes in the global geopolitical landscape compared to the period when China experienced its rapid rise between 1980 and 2015. Unlike that time, when globalization was expanding and the world welcomed China's integration into the global economy, the current environment poses new challenges. Concerns over climate change and the impact of Artificial Intelligence on the workforce add uncertainty to India's path toward sustained high growth rates.

To benefit from the 'China Plus One' strategy, India possesses two potential options, as outlined in the Economic Survey. The first is integrating into China's supply chain, while the second involves attracting foreign direct investment (FDI) from China. The survey suggests that prioritizing FDI from China holds more promise, following the successful examples of East Asian economies in the past. This approach would enable India to increase its exports to the United States, particularly as the US and Europe seek alternative sourcing options away from China.

Choosing FDI as a means to capitalize on the 'China Plus One' strategy proves more advantageous than relying solely on trade. India's significant trade deficit with China and the shifting dynamics of global trade make attracting Chinese companies to invest in India and exporting products to global markets a more efficient approach. By reducing dependency on imports from China and adding value through local manufacturing, India can position itself as a robust player in the global supply chain.

Overcoming the challenges and seizing the opportunities presented by the 'China Plus One' strategy requires a collaborative effort between the central and state governments, as well as active participation from the private sector. By fostering a conducive environment for investment, implementing supportive policies, and focusing on skill development, India can attract substantial FDI, drive economic growth, and solidify its position as a key player in the global economy.

India's journey towards 'Viksit Bharat' with strategic planning, steadfast implementation, and a proactive approach, the nation has the potential to achieve its ambitious economic goals and emerge as a global powerhouse by 2047.