The Economic Survey 2023-24, presented in Parliament by Finance Minister Nirmala Sitharaman, offers insights into India’s future economic journey and how it will differ from China’s rise.
India’s Economic Ambitions:
Currently, India is the world’s fifth-largest economy by nominal GDP, and it aims to become the third-largest economy in the coming years. A key strategy for achieving this goal is leveraging the ‘China Plus One’ approach. This strategy focuses on diversifying supply chains to reduce dependency on China, and India is in a strong position to benefit from this shift.
India vs. China:
The Survey highlights that India’s path to becoming a developed country by 2047 will be different from China’s experience from 1980 to 2015. During China’s rise, globalization was expanding, the geopolitical environment was relatively stable after the Cold War, and concerns about climate change were less urgent. Today, the situation is different. There are new challenges, including climate change, rising geopolitical tensions, and the unpredictable impact of Artificial Intelligence on jobs. Overcoming these challenges will require collaboration between the government and private sector.
How India Can Benefit from the China Plus One Strategy:
India has two main options for capitalizing on the China Plus One strategy:
1. Integrate into China’s Supply Chain: This means becoming a part of the existing supply networks that China is involved in.
2. Encourage Foreign Direct Investment (FDI) from China: This involves attracting Chinese companies to invest in India, which can then help boost India’s exports to the United States and other markets.
According to the Economic Survey, focusing on attracting FDI from China is a more promising option for increasing India’s exports compared to relying on trade alone. This is because China is currently India’s largest import partner, and the trade deficit with China is growing. By encouraging Chinese companies to set up operations in India, the country can export products to markets like the US and Europe, creating more value and reducing the reliance on direct imports from China.
India’s journey to becoming a developed nation by 2047 will be more complex than China’s path. The current global environment poses new challenges, including geopolitical tensions and the impact of technology on jobs. However, India can take advantage of the **China Plus One** strategy by attracting Chinese investments and boosting exports, which could help it achieve its economic goals for the future.