The tense relations due to border standoff between China and India led to a campaign by Indian traders to boycott Chinese products and Indian authorities mulling higher trade barriers.
In terms of global value chains, India is looking to create its own industrial base and alternate global value chain, introducing many preferential policies, economic stimulus and incentives for Indian industry. Additionally, some Indian industrial sectors which rely on supplies from China are now looking to create alternate and reliable supply chains.
China has been a top trading partner of India for years, while China’s exports to India have accounted for about 2 percent of its total exports. India can take confidence East Asian countries who have developed highly integrated industrial chains. India has huge amounts of natural resources critical for sustaining industrial bases, India can use these reserves to establish a stable industrial chains.
It would be a rational choice for India to explore a cooperated development of Asian regional economies. For instance, India and Japan maintain high cooperation potential in the infrastructure sector, as Japan can offer both the technical expertise as well as reliable financial assistance.
The economic synergy between India and developed Western countries may also be explored; India needs to build sufficient capacity to replace China by consolidating infrastructure, competitive labor force and introducing system reforms.
The US, under the Trump administration, has been courting India politically, economically and militarily. India must devise economic strategies based on the comprehensive assessment of its own. The trend of developing economic ties between the EU and India has picked up since video summit in July in which both sides vowed to further explore bilateral cooperation.
EU has formulated its won “European strategic autonomy” and economic sovereignty, which stresses on reducing external dependency, especially its dependency on China. India is seen as an alternative to China for Europe to diversify its external supply chains and to extend European exports and business.
To gain an advantageous position in current international strategic competitions for cutting-edge technologies and emerging industries, the von der Leyen Commission is now carrying forward a new industrial strategy and working to build Europe’s own digital platforms. It regards India as a potential partner for Europe’s digital transformation, considering the highly developed Indian software industry.
As more EU-China competition and conflicts appear in technology, industry, trade, and investment, India is being considered a counterbalance to China. Overall, the initiatives taken by India domestically to decouple from Chinese supply chains, the Indian initiative to form an alternate industrial supply chain base is now showing promise, as regions such as EU have recognized Indian potential. It is now all the more important that Indian consumers must support endeavors by its economic planners and industrial sector, by embracing Indian products and boycotting Chinese goods. There cannot be a better auspicious occasion to support this initiative than Diwali.