India Faces Roadblocks in Capturing ‘China Plus One’ Strategy, NITI Aayog Report Reveals
Limited Success Despite Growing Trade Opportunities
India’s success in capturing the ‘China Plus One’ strategy has been limited, according to NITI Aayog’s latest Trade Watch report. While the strategy—aimed at diversifying supply chains from China—is gaining traction globally, India has failed to fully leverage its potential as an alternative manufacturing hub.
The report notes that while India has experienced some success in attracting foreign investments, challenges such as inadequate infrastructure, regulatory hurdles, and a lack of competitiveness in key sectors have slowed its progress.
US-China Trade Conflict: A Window of Opportunity for India
The intensifying trade conflict between the US and China, which escalated this week with new restrictions and retaliations, has created a volatile global trade environment. The US has imposed export bans on crucial technology, including semiconductor manufacturing equipment, while China has restricted the export of rare earth metals essential for tech industries.
This disruption presents a unique opportunity for India to step in and offer an alternative to global companies seeking to de-risk their supply chains. BVR Subrahmanyam, CEO of NITI Aayog, has emphasized that India must act quickly to harness these opportunities, saying, “The trade disruption will lead to trade diversion, and we must be ready to capture that.”
India’s Struggles: Key Barriers to Growth
Infrastructural Deficiencies: Insufficient ports, outdated logistics, and poor transportation networks make it difficult for India to compete with other Asian manufacturing hubs like Vietnam.
Unpredictable Trade Policies: Frequent changes in policies and unclear regulations make it hard for businesses to plan long-term operations in India.
Lack of Competitive Manufacturing Sectors: India still depends on imported materials for key industries such as electronics and semiconductors.
Workforce Skill Gaps: The need for a more advanced, skilled workforce is crucial to drive India’s competitiveness in high-tech manufacturing.
Strategic Steps India Must Take to Seize Opportunities
Boosting Infrastructure Investment: Upgrading transportation and logistics infrastructure will be key to making India a viable alternative to China.
Enhancing Trade Policy Consistency: Clear, stable policies will help attract more foreign investment in India’s manufacturing sector.
Promoting Advanced Manufacturing: Incentivizing the production of high-tech goods such as semiconductors and electronics will elevate India’s standing in global supply chains.
Workforce Development: Investing in education and training programs to build a workforce skilled in automation and advanced manufacturing is essential.
Conclusion: Can India Capitalize on This Global Shift?
India has the potential to capitalize on the shifting global supply chain dynamics, especially in light of the growing US-China trade conflict. However, realizing this potential requires significant structural changes and strategic foresight.
The ‘China Plus One’ strategy could be a game-changer for India, but the country needs to address its infrastructure gaps, streamline trade policies, and invest in human capital to truly seize this opportunity. The next few years will be critical in determining whether India can emerge as a global manufacturing leader.
