NITI Aayog says India must do more to capitalise on China +1 strategy

The NITI Aayog has stated that India has seen limited success in capitalising on the “China plus one” strategy, with Southeast Asian countries like Malaysia, Thailand, Vietnam, and Cambodia being the bigger beneficiaries of the shift away from China.

The NITI Aayog noted that the most prominent supporters of globalisation are becoming protectionist, threatening the rules-based multilateral trading process. Concerns over supply chains have led to nearshoring, with every country aiming to grow at the expense of others.

NITI Aayog said it will release the Trade Watch Quarterly Report for the first quarter of the ongoing fiscal,  which will include analytics and insights based on primary data.

Emphasising the need to increase trade to capitalise on opportunities to reach a $30 trillion GDP by 2047, the NITI Aayog pointed out that the European Union’s Carbon Border Adjustment Mechanism (CBAM) poses uncertainty for major export commodities, particularly in the iron and steel industry, which accounts for 23.5% of exports to the EU.

Linking economic growth to gains from innovation and the micro and macro dimensions of trade, NITI Aayog’s Vice-Chairman, Suman Bery, explained that the Current Account Deficit (CAD) reflects the gap between national savings and investments. He suggested that a large CAD should be welcomed when there is a surplus in services.

With trade defence measures entering a new era due to CBAM and Trump’s proposed tariffs, he stated that India must decide whether to support revived multilateralism while balancing its interests and influence at the World Trade Organization (WTO).

Bery noted that the economy benefits more from imports than exports, as imports provide competition. He cautioned against discouraging imports to the extent that it encourages local monopolies, suggesting that any tax on imports effectively becomes a tax on exports.

He explained that trade logic traditionally favours consumer interests; however, even the US prioritises producer interests by erecting tariff barriers. He warned of adverse impacts on downstream users if competitiveness is diminished by trade barriers that restrict cheap imports. Although he did not mention any specific country, he highlighted the issue of opaque, non-market economies that exhibit oversupply and end up dumping goods in other countries.

Also read: NITI Aayog chief says India is in pole position to take advantage of Trump’s China tariffs