India failed to create positive impression among businesses moving away from China

Context: Parliamentary committee on Commerce has submitted a report on the status of India’s positive business impression. 

Highlights of the report

  • India has not been able to take advantage of the “China Plus One Strategy,” through which multinationals shifted manufacturing and production away from China.
  • Southeast Asian countries such as Vietnam, Thailand, Cambodia, and Malaysia have become bigger beneficiaries of the strategy.
  • India’s competitive position in the pharmaceutical sector is undermined by its high import dependence for bulk drugs or active pharmaceutical ingredients (APIs), especially from China. 
  • In fiscal year 2022-23, till November 30, the value of total import of APIs stood at ₹27,209 crore, out of which imports from China stood at ₹18,973 crore, nearly 70% of the total share.

What is the China Plus 1 strategy: China Plus One or C+1 is the term ascribed to businesses avoiding investing solely in China and diversifying their business into other countries.

Who introduced the China Plus One strategy: The earliest use of the term “China Plus One” can be traced to 2013, but there is no individual to whom the concept has been credited.

What is the Europe Plus One strategy: Similar to the China strategy, Europe Plus One describes European industrialists who are exploring options to relocate their production outside of Europe.

Government’s reply

  • Government has replied that Production Linked Incentive (PLI) schemes have the capability to make India a more attractive location for companies looking to diversify their supply chains away from China. 
  • It added that more than 3,500 provisions have been decriminalised by the Ministries and the States. 
  • The Jan Vishwas Bill to amend 42 Central Acts has been introduced to enhance trust-based governance.

Committee’s suggestion

  • Rationalisation of direct taxes and indirect taxes must be done in sync with the international norms and laws to increase the competitiveness of domestic industries in the global markets.
  • It asked the government to pursue Free or Preferential Trade Agreements with countries that seek to invest in India under the ‘China Plus One Strategy’. 

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