India Urged to Capitalize on Companies’ Efforts to Move Manufacturing Outside of China, Says World Bank President
NEW DELHI, July 19 (Reuters) – India has a golden opportunity to attract investment from global companies seeking to diversify their supply chains and build factories outside of China, according to the new World Bank president. Ajay Banga, who took over as president last month, believes that India has a window of three-to-five years to seize this opportunity.
The comments from Banga come on the heels of recent investment announcements by U.S. firms, including chipmaker Micron Technology, in India. These moves come as the United States looks to establish a strong counterweight to China in Asia amid escalating tensions between the two countries.
In recent years, companies across the globe have implemented a “China Plus One” strategy, aiming to build manufacturing units outside of China in order to reduce reliance on the People’s Republic.
“I think India’s opportunity currently is to cash in on the ‘China plus one’ opportunity. This opportunity won’t stay open for 10 years,” Banga told reporters during his first official visit to India.
Indian Prime Minister Narendra Modi recently completed his first state visit to the United States, coinciding with a flurry of investment announcements by U.S. companies in India. Banga noted that India’s economic growth has been cushioned by strong domestic consumption in the face of a global slowdown.
During his visit, Banga also met with India’s Finance Minister Nirmala Sitharaman to discuss the G20 bloc, which India currently holds the presidency of.
Looking ahead, the World Bank chief expressed concerns about a potential slowdown in the global economy in the early part of next year. He emphasized the need for private capital investments to support global efforts for renewable energy funding. The World Bank estimates that developing nations will require $1 trillion by 2030 for the transition to green energy in order to achieve net-zero targets.
“The fact remains we will need different forms of concessional capital. We will also need different forms of multilateral bank capital and government capital and philanthropy capital to take first risk positions or help enable the blended finance to come through,” Banga said.
As India continues to navigate the global economic landscape, the country now faces a unique opportunity to position itself as an attractive investment destination for companies seeking to move their manufacturing outside of China.