India's Struggles in Capturing 'China Plus One' Strategy

India has struggled to benefit from the 'China Plus One' strategy. While Vietnam, Thailand, and others gain export share, India's manufacturing potential remains underutilized. Factors like cheaper labor and FTAs are missing. The EU's Carbon Border Adjustment Mechanism further challenges India's iron and steel exports, imposing higher tariffs and compliance costs.

A recent report by government think tank Niti Aayog highlights India’s ongoing battle to seize opportunities from the ‘China Plus One’ strategy. This approach aims to diversify global supply chains away from China. However, neighboring nations like Vietnam, Thailand, Cambodia, and Malaysia have surged ahead in expanding their export shares.

The report attributes their success to factors such as cheaper labor, simplified tax laws, lower tariffs, and a proactive attitude in signing Free Trade Agreements (FTAs). These elements have helped them capture a larger portion of global exports, while India's progress remains limited.

Additionally, India faces challenges from the European Union’s Carbon Border Adjustment Mechanism (CBAM), set to impact industries like iron and steel due to potential tariffs. This measure, designed to prevent carbon leakage, will impose compliance costs, affecting India's trade competitiveness in the EU market.

(With inputs from agencies.)