"India's economic prosperity will be driven by its global interdependence, in increasing trade and investments into and from India, helping drive job creation, GDP growth and prosperity. Today the global supply chain situation works in India’s favour for increased participation in manufacturing,” Arun Kumar Said
Arun Kumar, former US Assistant Secretary of Commerce for Global Markets and managing partner at Celesta Capital, emphasized India's potential to capitalize on global interdependence for increasing investment, driving job creation and GDP growth during a conference at George Washington University. He also asserted that the Current China Situation presents an opportunity for India to be an alternative or additional node in global Supply Chains.
“India is a beneficiary of globalisation. Its economic prosperity will be driven by its global interdependence, in increasing trade and investments into and from India, helping drive job creation, GDP growth and prosperity. Today the global supply chain situation works in India’s favour for increased participation in manufacturing,” he said
The former official said as India becomes the third largest economy in nominal GDP and as the Indian middle class grows to become larger and with higher incomes, it will emerge as a significant market for US and global businesses.
India’s productive capacity will similarly find enhanced ways to serve global demand as we already see in technology, he said.
“A continued focus on the ease of doing business, ease of trade facilitation, creation of modern infrastructure and associated logistics are required to facilitate greater participation in global value chains,” he said in his remarks at a conference on “Making India an Advanced Economy by 2047: What Will it Take” at the George Washington University here.
Amidst the US-China discord, with over 25 per cent of global manufacturing coming from China and most critical value chains intertwined with China a key issue that has emerged is that of concentration risk, he said.
“This drives a need for redundant sources of supply, what is known as supply chain resilience. The concentration risk came into sharp focus during the Covid pandemic. For example, Chinese manufacturers made 40 per cent of all Active Pharmaceutical Ingredients—the vital components of medicines and 42 per cent of all personal protective equipment (PPE),” he added.
“From India’s vantage point, the China situation presents an opportunity to be an alternative or an additional node in global supply chains, supplanting or supplementing China. The focus on supply chain resilience is driving onshoring or near-shoring of value chains. A concept that gained currency is ‘friend-shoring’ - reshaping of supply networks to include geopolitically closer countries,” Kumar said.
Observing that India is not part of major regional free trade agreements, Kumar warned that this posture will handicap it in participating fully in many supply chains.
While the Regional Comprehensive Economic Partnership may be unpalatable to India for domestic political or perceived security reasons on account of China’s dominance in the agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership CPTPP could well be one for India to consider.
“The CPTPP is an Indo Pacific treaty. Although it is interesting to note that the UK has applied to join it. And so has China. While staying out of these regional FTAs, India is embracing and is key to several other multilateral frameworks, mostly focused on the Indo-Pacific. The most important of these is the Quad, made up of the US, Japan, Australia and India.