With China facing economic slowdown on account of domestic and geo-political reasons, India needs to spruce its manufacturing sector to attract investment and emerge as an alternative global sourcing hub, said experts.
The Chinese economic growth is expected to moderate to 3.5 percent this year due to various reasons, including disturbances in the property sector and frequent Covid-induced lockdowns.
Besides, the growing tension between the US and China over Taiwan may escalate into geopolitical instability adversely impacting sourcing of inputs and equipment from the world’s second largest economy.
These developments will have some positive spillovers for India, Sujan Hajra, chief economist Anand Rathi Shares & Stock Brokers said.
“First, uncertainties in China can increase the attractiveness of India as an alternative global sourcing hub. Second, in the emerging market fund allocation by global investors, the share of India can increase at the cost of China,” he said.
After June, global rating agency Moody’s has again slashed China 2022 growth forecast. As per the latest report, the second largest economy in the world expected to grow at 3.5 percent from earlier projection of 4.5 percent.
The slowdown in China provides opportunities for India to increase its share in the global value chain, Aditya Sood, Portfolio Manager – InCred PMS, said.
Various initiatives, including the Production-Linked Incentive (PLI) scheme taken by the government would help in increasing exports of goods, he said.
According to government officials, India has taken several initiatives to increase its exports and raise its share in the global value chain.
Even the world is looking at reducing their dependence on China and expanding their sourcing base, the official said, adding, the slowdown in China gives India an opportunity to gain market share.
Despite the historic global disruptions, India’s exports stood at a total (goods and services) of USD 670 billion (about Rs 50 lakh crore) during the last fiscal year.
India’s merchandise exports in 2021-22 crossed USD 418 billion (Rs 31 lakh crore), as against the target of USD 400 billion (Rs 30 lakh crore).
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