EconSurvey
India must focus on garnering Chinese FDI to push exports
This story was originally published at 20:57 IST on 22 July 2024
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NEW DELHI – The government must focus on garnering foreign direct investment from China to boost India's merchandise exports, the Economic Survey for 2023-24 (Apr-Mar) said today. This is contrary to the government's current policy that envisages minimal business interaction with Chinese companies.
"The world cannot completely look past China, even as it pursues China plus one," the survey tabled by Finance Minister Nirmala Sitharaman in Parliament said. "Focusing on FDI from China seems more promising for boosting India's exports to the US, similar to how East Asian economies did in the past."
China is India's top import source with total merchandise imports of $101.75 bln in 2023-24. India had a trade deficit of $85.09 bln with China in the last fiscal year.
"Choosing FDI as a strategy to benefit from the China plus one approach appears more advantageous than relying on trade," the ministry said. "This is because China is India's top import partner, and the trade deficit with China has been growing."
As the US and Europe shift their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to the US, the survey said. This is a better policy than importing from China, adding minimal value, and then re-exporting them, the survey said.
"It is imperative that India finds the right balance between importing goods from China and importing capital from China," the survey said.
While India has liberalised foreign direct investment rules for most items, investments from countries that share a land border with India require government approval. India shares a land border with China. India has received foreign direct investment of just $2.5 bln from China since 2000. End
US$1 = 83.66 rupees
Reported by Krity Ambey
Edited by Saji George Titus
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