Paper: GS – II, Subject: International Relations, Topic: India’s relations with great powers, Issue: Steps to leverage China plus one strategy.
Context:
The China Plus One (C+1) strategy stresses on the need to diversify global manufacturing away from China. India sees this as a strategic opportunity, but success is contingent on targeted reforms and long-term planning.
Key Highlights:
- China’s Dominance: China currently accounts for 30% of global manufacturing which is projected to rise to 45% by 2030.
- China Plus One Strategy: It aims to:
- Diversify global supply chains.
- Reduce overdependence on China.
- It is built on three assumptions:
1. Geopolitical diversification is sustainable.
2. Dependence on China is risky.
3. Supply chains are relocatable.
Challenges Facing China Plus One Paradigm:
- Uncertainties: US tariff policy causes uncertainties with the Duties on Chinese goods could exceeding 50%. Countries like Vietnam, Thailand etc may also face up to 46%.
- Revenue loss: Uncertainty affects C+1 countries’ long-term viability as alternatives. Thailand may lose $24 billion exports if tariffs imposed.
- Complex interdependence: Complexity of supply chains and China’s embeddedness challenge full relocation.
- Global shocks: Global inflation, supply shocks, and protectionism also complicate India’s path.
- Lessons for India:
- Certification issues: Many US imports from CPI nations still depend on Chinese intermediate goods. Thus certifying “non-Chinese origin” is getting harder. It raises trade risks for India if not properly diversified.
India’s Response – Five focus areas:
- Expand Infrastructure: Expand beyond flagship corridors to include Last-mile connectivity, Electricity reliability, and Industrial parks for exports.
- Strengthen Trade Diplomacy: India must sign bilateral & multilateral trade agreements with C+1 countries and expand trade deals with US, EU, Japan, etc.Need to ensure tariff stability for industries.
- De-risk Supply Chains: India aims to reduce over-dependence on specific countries through disruptive policies an encouraging resilient and localised supply chains.
- Improve Certification: aims to develop capacity to verify origins and supply chain traceability which is critical to avoid non-compliance with US/EU trade rules.
- Invest in Workforce Development: As Electronics manufacturing target of $300 billion needs training of 8–10 million workers over the next decade, fixing skill gaps is vital for competitiveness.
Conclusion:
China Plus One is a time-sensitive moving window. India must act swiftly to capture lost manufacturing, balance trade competitiveness and build long-term economic resilience.
“Global trade is in flux, but we must prepare to become the world’s next factory.”
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