Intent: China Plus One, Impact: India Minus One? Premium

Governments prioritize defense, economy, and culture; India's 'China Plus One' strategy faces challenges in critical minerals sector.

Governments the world over engage in self-protection overtly or covertly. Defence is the best-known form of securing a nation. Next priority is the economy, and in some countries not so secular - religion and culture get equal emphasis. Economic protection could include restrictions on trade, tariffs, imports and exports.

Our government at the Centre, and the Leadership which is now in its third term, made a tectonic shift in the policy terrain, specifically in the manufacturing vertical, by keenly observing and swiftly reacting to the apprehensions many countries had about a nation well-endowed with natural resources, production facilities and human resources.

Always a closed-door entity, the Red Dragon had the advantage of avoiding scrutiny of manufacturing methods, safety protocols or environmental safeguards. Add to this a socialist bent of mind, wherein manufacturing enterprises that thrived were state-owned, and detractions such as labour unrest, community uprising or public protests could be swiftly quelled, and you had an ecosystem that ensured high-volume industrial output.

The watching world had to come up with an alternative. The status quo of relying on this country for outsourcing or imports could lead to over-reliance on one supply source and provide the exporter greater opportunity to strengthen its stranglehold. Hence, a diversification strategy was formulated in 2013 and anointed ‘China Plus One.’

At its core, C+1 encourages companies to minimise their dependency on China for supply chain and manufacturing. The genesis was rising labour costs in China, escalation of trade tensions, and the import bottleneck faced during COVID-19 disruption. India, with its political stability, infrastructure, ease of communicating in English, and state-of-the-art connectivity, began emerging as a “Plus One” destination within a short time.

Key decisions taken by the Indian Government accelerated the switch for outsourcing or relocation of manufacturing (we were already a preferred partner for IT-related services). The ‘Make In India’ initiative launched by Prime Minister Narendra Modi in 2014 proved to be well-timed with the world’s search for a viable outsourcing nation.

A cascade of reforms, such as reduction in corporate taxes, introduction of production-linked incentive schemes, upgrading of airports and investment in superfast trains and multi-lane expressways made us even more investor-friendly and visitor-friendly.