The Survey highlighted that India has two choices to make the most of this trend – it can integrate into China's supply chain or promote FDI from China
Overall, the Survey said that India has seen a boost in its electronic exports, particularly in mobile phones
It said that India can benefit from the shift away from China and cited the growth in India’s manufacturing exports
At a time when companies have adopted ‘China plus one strategy’, India should look to increase the foreign direct investment (FDI) from China in the country to benefit from the global shift and increase the country’s exports, especially to the US, the Economic Survey 2023-24 said.
The Survey highlighted that there is a global shift in terms of manufacturing dynamics, with multinational companies adopting a ‘China Plus One’ (C+1) strategy to curtail their dependencies on the country amid mounting global tensions.
The Survey, tabled by finance minister Nirmala Sitharaman in the Parliament today, said that India has two choices to make the most of this trend – it can integrate into China’s supply chain or promote FDI from China. It added that focusing on Chinese FDI is a more promising prospect.
“… choosing FDI as a strategy to benefit from China plus one approach appears more advantageous than relying on trade. This is because China is India’s top import partner, and the trade deficit with China has been growing. As the US and Europe shift their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value, and then re-exporting them,” the Survey added.
The Economic Survey said that India can benefit from the shift away from China and cited the growth in India’s manufacturing exports.
“The appeal of India lies in its large domestic consumer market, which makes it attractive for companies to set up operations there. In the electronics sector, there is a focus on smartphone manufacturing and assembly. The government’s PLI scheme, including tax breaks and subsidies, plays a significant role in attracting companies,” it said.
It is pertinent to note that Apple has moved a part of its production to India over the last few years, which has made the country an important producer of iPhones. Apple assembled $14 Bn worth of iPhones in India during FY24, constituting 14% of its global iPhone production.
Overall, the Survey said that India has seen a boost in its electronic exports, particularly in mobile phones. Exports to the US alone surged from $2.2 Bn in FY23 to $5.7 Bn in FY24.
Similar to Apple, other tech majors are also looking to boost their productions in India. In February, it was reported that tech giant Google is looking to begin production of its Pixel smartphones in India. Further, Chinese Original equipment manufacturer (OEM) Xiaomi India recently revealed its plan to further expand its manufacturing partnerships in India.
