India making efforts to attract industries seeking to diversify from EU, China: Sitharaman

'China-plus-one, we are actively making sure that India becomes that successful plus-one,' she said

The government of India is making efforts to attract industries that plan to diversify their production base from Europe due to impending recession, geopolitical crisis and other challenges in the region, Union Finance Minister Nirmala Sitharaman said on Tuesday.

“The world has been talking about China-plus-one. Can that plus one be India? Now I am hearing EU-plus-one as well. So, the people who have invested in China may want to continue there, but may also want to find another source from where they can produce and be a part of the global value chain,” Sitharaman said while addressing a session at the 17th Pravasi Bharatiya Divas convention in Indore, Madhya Pradesh.

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“We would like to pit India as that plus one country when it comes to consideration of those manufacturers who want to get out of China or want to have one more place from where they can produce,” she added.

While the China-plus-one strategy has gained currency among major global manufacturers, EU-plus-one is a new development. China-plus-one refers to a business strategy in which companies avoid investing only in China and diversify their businesses to alternative destinations.

According to Sitharaman, a similar strategy is being considered among the companies that have manufacturing bases in Europe.

“China-plus-one, we are actively making sure that India becomes that successful plus-one. But the European Union as well. If they are going to go through recession, which is a probability, which many people are now saying is highly probable, so there is this temptation of many of the manufacturers who are located in Europe also to look at plus one,” she said.

“China plus one is ongoing. European Union plus one, and that plus one again, can India fit in that role, is the effort of the government of India to make sure that we are able to attract industries which are also looking for setting up elsewhere other than being in Europe,” the finance minister said.

Sitharaman noted that some big companies have already committed to setting up manufacturing bases in India.

She said Airbus would soon start producing C-295 transport aircraft from its manufacturing facility in Vadodara, Gujarat. Airbus has tied up with Tata Group for setting up a manufacturing facility in Gujarat. The foundation stone of the project was laid in October 2022. The total estimated cost of the project is Rs 21,935 crore.

The United States-based Lockheed Martin has set up a manufacturing facility in India to produce F-16 wings. Lockheed Martin has also tied up with Tata group for its India manufacturing facilities. “From here they will export wings to all the F-16 assembly points,” Sitharaman said.

The finance minister said India is poised to become an important player in chip manufacturing in the world. One in every 10 semiconductor design engineers in the world is Indian.

She noted that the largest number of semiconductor design engineers are located at the outer ring road area of Bengaluru. “You will find the concentration of 50,000 to 70,000 design engineers who are in semiconductor designing, all of them present at the outer ring road area of Bengaluru alone,” she said.

“They are the semiconductor design engineers, who are at the heart of the semiconductor industry,” she added. The total number of semiconductor design engineers in the world stands at around 6-7 lakh. Nearly one-tenth of these are located in Bengaluru alone.