India achieves restricted success in capturing ‘China Plus One technique’ up to now: Niti Aayog report, ETCFO
NEW DELHI: India has seen restricted success up to now in capturing the ‘China Plus One technique’, whereas Vietnam, Thailand, Cambodia, and Malaysia have grow to be larger beneficiaries, in keeping with a report of presidency suppose tank Niti Aayog. It mentioned that elements corresponding to cheaper labour, simplified tax legal guidelines, decrease tariffs and pro-activeness in signing Free Commerce Agreements (FTAs) have performed a important function in serving to these nations increase their export shares.
The US has applied stricter export controls and better tariffs on Chinese language items to restrict China’s progress and expenditure in the direction of technological progress.
This has led to a fragmentation of world provide chains, prompting multinational firms to hunt alternate options to Chinese language manufacturing.
It mentioned that India is seen as a beautiful vacation spot for corporations seeking to shift their manufacturing bases out of China and this shift provides the nation an opportunity to boost its home manufacturing capabilities, significantly in high-tech industries.
“Nevertheless, India has seen restricted success up to now in capturing the China Plus One technique up to now,” mentioned the report – ‘Commerce Watch Quarterly’.
In recent times, it mentioned, India’s share in international commerce has fallen for labour-intensive sectors regardless of vital endowment.
“China is the principle competitor in a number of key product classes highlighting the necessity for India to boost competitiveness in these merchandise. India has a strong foothold in developed markets just like the USA, UK, and Germany, throughout prime product classes however there are alternatives to discover rising markets,” it mentioned.
It additionally mentioned that a number of research assessing the EU’s Carbon Border Adjustment Mechanism (CBAM) establish African and Asian nations because the “most” susceptible to its results.
CBAM (or carbon tax), is aimed toward stopping carbon leakage and can apply to high-risk imports corresponding to cement, iron and metal, aluminium, fertilizers, electrical energy, and hydrogen beginning January 2026. It requires the acquisition of CBAM certificates, reflecting the carbon emissions linked to those items.
For India, the iron and metal business, representing 23.5 per cent of its EU exports, faces the best publicity below CBAM, it added.
“Indian corporations could incur tariffs of 20-35 per cent, resulting in greater prices, lowered competitiveness, and decrease demand within the EU market. Moreover, compliance prices will rise as a result of want for detailed emissions reporting,” the report mentioned.
The European Union (EU) is India’s second-largest buying and selling accomplice. In 2023-24, the EU accounted for 17.4 per cent (USD 76 billion) of the nation’s whole exports.
