Niti Aayog member Arvind Virmani on Sunday said it is better for India to invite Chinese companies to invest and produce goods here to boost local manufacturing rather than importing goods from the neighbouring country. Virmani was responding to a plea made by the pre-Budget Economic Survey on July 22 to seek foreign direct investment (FDI) from China to boost local manufacturing and tap the export market.
“So, the way an economist looks at it, there is a trade-off…So, the trade-off is that if there are going to be some imports, which we are anyway going to import from China for 10 years, 15 years, it is better to invite Chinese companies to invest in India and produce the same goods here,” he said in an interview.
According to the Economic Survey, as the US and Europe are shifting their immediate sourcing away from China, it is more cost effective for Chinese companies to invest in India and export products to these markets rather than importing from the neighbouring country.
“So, really, we have to look at each good at a time, you know, each category of good at a time, and evaluate that trade-off,” the eminent economist said. The survey said India has two options to benefit from the ‘China plus one strategy’ – it can integrate into China’s supply chain or promote FDI from China. Indian market still in ‘sweet spot’: investment firms “That is the trade-off… rather than continuing to import from them (China). We should allow that,” Virmani said. “Of these options, focusing on FDI from China looks more promising to boost India’s exports to the US, as East Asian economies have done in the past.