Foreign policies and global trade dynamics have significant implications for India’s economy. Strategic shifts, like diversifying supply chains, free trade agreements (FTAs), and geopolitical developments, are creating opportunities across industries such as manufacturing, textiles, IT, and pharmaceuticals. ETMarkets spoke to Kshitiz Mahajan, CEO of Complete Circle Wealth to explore how policies from key players like China, the UK, and the USA could shape India’s economic prospects.
1. China’s Policies and Their Impact on India
China +1 Strategy
India’s position as a manufacturing hub is solidifying under the “China +1” strategy, where companies diversify operations away from China.
- Manufacturing: Concerns over Chinese surveillance through tech giants like Huawei have pushed corporations to source from alternate geographies. India, with its Production Linked Incentive (PLI) schemes, offers a viable solution.
- Textiles: Global buyers, including Walmart and JC Penney, are moving towards sourcing “responsible cotton,” given allegations of human rights abuses in Chinese cotton production. Indian textile firms like KPR Mills and Welspun stand to benefit.
- IT Sector: With businesses embracing digitization, demand for IT services, cloud solutions, and cybersecurity has surged. India’s IT companies are well-placed to capitalize on this trend.
- Pharmaceuticals: India’s robust pharma industry, particularly in generics and specialty drugs, benefits from global efforts to reduce reliance on Chinese suppliers.
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2. India-UK Free Trade Agreement (FTA)
The proposed India-UK FTA is poised to double bilateral trade to $100 billion by 2030, up from the current $49.8 billion annually. The agreement holds immense potential for sectors like textiles, auto, and services.
- Textile Boost: Indian players such as Gokaldas Exports, Ambika Cotton, and PDS Ltd could gain better access to the UK market.
- Economic Synergy: With the UK seeking reliable trade partners post-Brexit, India’s expanding export capabilities align perfectly.
3. USA’s Trade Policies: A Mixed Bag
Trump’s Tariff Stance
Donald Trump’s proposed tariffs on goods from China and Mexico could indirectly benefit India.
- Manufacturing: Higher tariffs encourage diversification, pushing global firms to explore countries like India.
- Oil & F&B: India’s growing capacity in oil refining and food processing makes it an attractive trade partner for American businesses.
- Auto Sector: India’s competitive labor costs and engineering expertise offer a compelling case for automobile manufacturing relocations.
Kamala Harris and Indo-US Relations
The anticipation of Kamala Harris in the White House raised hopes for enhanced India-US relations. While the exact policies under her leadership remain speculative, a stable and forward-looking partnership is likely to bolster trade and technology ties.
4. India’s Strategic Push: A Global Manufacturing Hub
India has proactively positioned itself as a preferred global manufacturing destination:
- ‘Make in India’ Campaign: Aims to boost local manufacturing with incentives and streamlined policies.
- PLI Scheme: Encourages domestic production in sectors like electronics, pharmaceuticals, and semiconductors.
- Export Ambitions: The Indian government plans to triple exports to $2 trillion by 2030, leveraging FTAs and global diversification efforts.
India is poised to benefit from shifting global policies. Strategic trade agreements, the China +1 strategy, and proactive government initiatives are driving its ascent as a global manufacturing and trade powerhouse. With a focus on sustainable growth and diversification, India is well-positioned to seize emerging opportunities across multiple sectors.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts/brokerages do not represent the views of Economic Times.)
