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Niti Aayog member Virmani encourages Chinese investment to push local production
Industry News- Aug 05,24
China's FDI in India has been minimal, with only 0.37% of total FDI equity inflows from April 2000 to March 2024.
Niti Aayog member Arvind Virmani has proposed that India should focus on attracting Chinese firms to invest and manufacture goods locally, rather than continuing to import products from China. This approach, he argues, would bolster India's manufacturing sector and enhance its export capabilities.
In an interview with PTI, Virmani emphasised the need for India to leverage the 'China plus one strategy' by either integrating into China's supply chain or promoting foreign direct investment (FDI) from China. He highlighted that while India will inevitably import goods from China for the foreseeable future, encouraging Chinese firms to set up operations in India could be more beneficial.
The pre-budget Economic Survey, presented on July 22, suggested seeking FDI from China to strengthen local manufacturing and access export markets. Virmani supported this view, stating, "If we are going to import some goods anyway, it is better to have Chinese companies invest in India and produce those goods here." He noted that with the US and Europe diversifying their supply chains away from China, having Chinese companies invest in India would allow India to export products to these markets.
Virmani also pointed out that focusing on FDI from China could help India enhance its exports, similar to the strategies adopted by East Asian economies in the past. He underscored the advantage of this approach over relying solely on trade, given China's status as India's top import partner and the growing trade deficit.
China's FDI in India has been minimal, with only 0.37% of total FDI equity inflows from April 2000 to March 2024. The bilateral trade relationship has been marked by tensions, particularly following the Galwan Valley clash in June 2020. Despite this, China remains India's largest trading partner, with a significant trade volume and a widening trade deficit.
In conclusion, Virmani advocated for a strategic shift towards attracting Chinese investment to drive local manufacturing and boost exports, aligning with India's broader economic and strategic interests.
(Source: ET)
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