- Why in News- Despite resources, India has not been able to create a positive impression among businesses moving away from China, a parliamentary panel on commerce said in a report tabled in the Rajya Sabha.
- The report stated that India has not been able to take advantage of the “China Plus One Strategy,” through which multinationals shifted manufacturing and production away from China.
- Other Southeast Asian countries such as Vietnam, Thailand, Cambodia, and Malaysia have become bigger beneficiaries of the strategy.
- The report said India’s competitive position in the pharmaceutical sector is undermined by its high import dependence for bulk drugs or active pharmaceutical ingredients (APIs), especially from China.
- The Ministry informed the committee that in fiscal year 2022-23,the value of total import of APIs stood at ₹27,209 crore, out of which imports
from China stood at ₹18,973 crore, nearly 70% of the total share.
China plus one strategy
- The China-U.S. trade war and the COVID-19 pandemic laid bare the need for companies to diversify supply chains outside of China. This has given rise to the “China plus one” strategy, in which multinational firms are moving to other countries, in addition to China.
- For many years, western companies have invested in China, drawn in by their low production costs, and enormous domestic consumer markets.
- Some Asian countries have put forward plans to attract overseas investment as companies look for another center of production or distribution like Thailand, Malaysia, and Vietnam.
- The government submitted that certain steps such as Production Linked Incentive (PLI) schemes have the capability to make India a more attractive location for companies looking to diversify their supply chains.
- More than 3,500 provisions have been decriminalised by the Ministries and the States, and the Jan Vishwas Bill to amend 42 Central Acts has been introduced to enhance trust based governance.
- The committee recommended that rationalisation of direct taxes and indirect taxes must be done in sync with the international norms and laws to increase the competitiveness of domestic industries in the global markets.
- The government informed that India has signed 13 Free Trade Agreements (FTAs) and six Preferential Trade Agreements (PTAs) so far, adding that FTA negotiations with the U.K, Canada and the European Union will be concluded in the “upcoming year”.
The committee is headed by Abhishek Manu Singhvi.