Economic Survey Advocates Increased Chinese FDI to Boost Exports

23 Jul, 2024

Economic Survey Advocates Increased Chinese FDI to Boost Exports

The Economic Survey highlights India's complex relationship with China, proposing a strategic shift to capitalize on the China Plus One strategy. It suggests integrating into China's supply chain or promoting foreign direct investment (FDI) from China. Examples like Apple and Foxconn relocating to India underscore the potential benefits. The Survey emphasizes that India's large domestic market attracts companies to establish operations locally.

Focusing on FDI from China appears more promising for boosting India's exports to the US. Despite China's dominance as India's trading partner, the Survey advocates for reforms to attract more foreign investment, such as streamlining labor laws and strengthening intellectual property rights. The goal is to balance importing goods with increasing FDI from China, which has been minimal so far.

The Survey points out that while India grows faster than China, its economy is still smaller. It highlights the need for developing countries to navigate import competition from China while enhancing domestic manufacturing capabilities through Chinese investment and technology. The Survey concludes that India's large trade deficit with China necessitates strategic decisions to boost manufacturing and integrate into global supply chains, potentially through selective Chinese investments.