India lags behind Vietnam, Thailand, and others in capturing the ‘China Plus One’ strategy, despite opportunities.
India has struggled to capitalise on the ‘China Plus One’ strategy, losing out to nations like Vietnam, Thailand, Cambodia, and Malaysia, according to a recent report by NITI Aayog. While global supply chains are diversifying away from China due to U.S. tariffs and geopolitical tensions, India has only achieved “limited success” in attracting firms to relocate their manufacturing bases.
The report attributes this to India’s complex regulatory environment, higher costs, and slower pace of free trade agreements compared to regional competitors. Countries like Vietnam and Malaysia has leveraged cheaper labour, streamlined tax systems, and proactive trade policies to capture significant export opportunities.
NITI Aayog CEO B.V.R. Subrahmanyam noted that U.S. President-elect Donald Trump’s tariff hikes on China and other trading partners could create significant openings for India, but swift action is needed to seize them. “We are at first slip; the ball is coming our way. Are we going to catch it or drop it?” he remarked during the report’s release.
Amid these shifts, geopolitical risks in the Middle East also threaten India’s trade stability. The report highlights potential disruptions in oil supply and trade routes, projecting a $10 per barrel hike in oil prices could worsen India’s Current Account Deficit (CAD) by 0.5% of GDP.
Despite setbacks, the report identifies untapped potential in sectors like high-tech manufacturing, organic chemicals, and automotive exports, offering India a chance to strengthen its position in global trade.
