Boosting Local Manufacturing: Arvind Virmani Advocates for FDI from China

Niti Aayog member Arvind Virmani suggests that India should encourage Chinese firms to invest and produce goods locally to enhance manufacturing and reduce imports. This strategy aligns with the 'China plus one' approach, focusing on foreign direct investment over trade, to boost India's exports to the US and Europe.

Niti Aayog member Arvind Virmani emphasized the importance of encouraging Chinese firms to invest in India's manufacturing sector rather than continuing to import goods from the neighboring country. His statements came in response to the pre-budget Economic Survey's call for greater foreign direct investment (FDI) from China.

Virmani highlighted a strategic trade-off: by having Chinese firms produce goods locally, India could benefit more than by importing the same products for the next decade. Given the US and Europe's shift away from China, this localized production could also help India tap into these markets effectively.

The Economic Survey underscored this point, pointing to the growing trade deficit with China as a reason to favor FDI. The survey noted that while China currently holds a minimal share in total FDI equity inflow to India, increasing this investment could bolster India's export capabilities and mitigate the trade imbalance.

(With inputs from agencies.)