The “China Plus One” strategy, gaining momentum as companies aim to diversify beyond China, may be a short-lived opportunity, according to the World Bank president, Ajay Banga. For India, this business approach presents an appealing chance to expand investment horizons and diversify its manufacturing base.
The disruptions caused by the Covid-19 pandemic and the simmering geopolitical tensions between the US and China have prompted companies to seek alternative manufacturing locations, spurring the global economic shift known as “China Plus One.”
To capitalize on this global transition, the Indian government is offering incentives to companies, such as monetary rewards for manufacturing mobile handsets in India. During his visit to a Skill India Mission center in New Delhi’s Dwarka, Banga highlighted India’s present opportunity to leverage the “China Plus One” strategy.
Historically, China’s low labor and production costs have attracted international corporations to set up production units there. However, with the pandemic exposing vulnerabilities in the global supply chain and escalating US-China tensions, Western economies are now diversifying their supply chain presence.
Banga emphasized the time sensitivity for India to act, stating that the “China Plus One” window will not remain open for a decade. This opportunity is a three-to-five-year window as supply chains pivot or broaden their presence.
During his meetings in New Delhi, Banga intends to discuss the potential of cashing in on the “China Plus One” opportunity with Indian government officials.
Last year, an economic consortium of 18 nations, including India, the US, and the European Union, devised a four-point roadmap to fortify supply chains, indicating a global effort to mitigate risks and vulnerabilities in supply dependencies.
Ajay Banga, at 63, created history last month by becoming the first Indian-American to preside over the World Bank. His visit to India coincided with Tuesday’s conclusion of the G20 Finance Ministers and Central Bank Governors meeting in Gujarat’s Gandhinagar.
