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With the recent skirmishes in the Arunachal border and the help China extends to Pakistan, Bangladesh and Sri Lanka we tend to believe that China is India’s ‘enemy number one’. But when we look at India’s foreign policy and now try to analyse its economic strategies, we are proved all wrong. While all three members of the ‘Quad’ – the US, Japan and Australia – want this international platform to become a military alliance to counter the aggression of China, India refuses to accept it and persuades others to let it remain a trade and cultural partnership.

The 2023-24 Economic Survey makes it clearer why India has a different strategy. The Survey says: “As the US and Europe shift their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to these markets, rather than importing from China, adding minimal value, and then re-exporting them”. India clearly wants to take advantage of the western ‘China plus one’ policy, but with a twist.

The Survey adds: “Over the last five years, a seismic change has occurred in the global manufacturing realm, with major multinational companies, including Apple and others, looking to ‘de-risk’ themselves from China, which was traditionally known as the ‘world’s factory’. Several companies have adopted a ‘China plus one strategy’ to reduce their reliance on China for high-tech electronic products and components.”

India has a huge trade deficit with China. So the best strategy would be to bring China into India through investments and instead of importing goods from China, let China manufacture in India and the product be sold in the western market. In other words, India’s strategy would be to seek the ‘right balance’ between importing goods from China as well as importing Chinese investments (FDI). This would reduce the India-China trade imbalance as well as improve the foreign direct investment whose cumulative figures however are not very satisfactory for India.

This year’s budget proposals have clearly made manufacturing of mobile phones in India easier and cheaper. More than incentivizing Apple to manufacture in greater numbers, it is a clear invitation to China to manufacture mobiles in India too. India in recent years is becoming one of the biggest exporters of mobile phones. It is hoped that the Chinese mobile phone companies which fled India for ED raids in recent times, will return because of the relaxations announced in FDI rules and in customs duties in the budget. The ‘ease in  doing  business’ in India is really becoming more and more attractive. The budget proposals, perhaps for the first time, are attracting the MSMEs to get integrated into mainstream government projects like ‘Digital India’ and ‘Make in India’.

India’s strategy regarding China is further explained in the Survey in greater detail: “Will China plus one result in a total movement of trading relations away from China? This may not be the case. Nations like Mexico, Vietnam, Taiwan and Korea, which were direct beneficiaries of the US’s trade diversion from China, increased their share of exports to the US, and at the same displayed a rise in Chinese FDI. Therefore, the world cannot completely look past China, even as it pursues China plus one.”

So next time we think of India’s external policies being detached from its domestic needs and ambitions, we need to think twice. Are the ‘fights’ between India and its neighbours and between the centre and the states - real or strategised? The common man needs to think and not believe everything at face value.