Why in the News?
Japanese companies, along with other global players, are increasingly turning to India under the China Plus One strategy, aiming to diversify supply chains and reduce overdependence on China.
About China Plus One Strategy:
- It is a global business model introduced in 2013 to reduce dependence on China by adding another country to the manufacturing or sourcing base.
- It emerged due to concerns about geopolitical risks, trade tensions, and regulatory unpredictability in China.
- The strategy gained momentum after the US–China trade war, China’s Zero-Covid policy, and increasing labour and compliance costs.
- Its goal is to create resilient and diversified supply chains by operating in China and one or more alternative countries.
- Vietnam, Mexico, and Taiwan have become early beneficiaries in sectors like machinery, electronics, and transport.
Benefits for India:
- India offers a large market, skilled labor, and cost advantages, making it an attractive destination for diversification.
- The growing digital infrastructure and industrial corridors support the relocation of manufacturing, with government schemes like PLI and Make in India aligning with the China Plus One goals.
- Challenges:
- India faces limited integration into global value chains, logistics inefficiencies, and regulatory bottlenecks.
- Historical protectionist trade policies and lack of participation in trade agreements like RCEP hinder its full potential.
- To compete with nations like Vietnam or Mexico, India needs labour reforms, improved ease of doing business, and better trade facilitation.
| [UPSC 2021] Consider the following:
1.Foreign currency convertible bonds 2.Foreign institutional investment with certain conditions 3.Global depository receipts 4.Non-resident external deposits Which of the above can be included in Foreign Direct Investments? Options: (a) 1, 2 and 3* (b) 3 only (c) 2 and 4 (d) 1 and 4 |
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
