Trade Essays

The China Plus One strategy — adding one alternative manufacturing location to reduce China dependence — accelerated dramatically following COVID-19 exposure of concentrated supply chain vulnerabilities. The question is whether India is actually benefiting at scale.

Where India is winning: Mobile phone manufacturing is the most cited success — Apple through Foxconn and Tata Electronics has significantly expanded India production with iPhone exports reaching approximately USD 14 billion in FY2024. Pharmaceuticals have attracted contract manufacturing as EU and US companies diversify away from Chinese APIs. Electronics PLI has attracted USD 9 billion in manufacturing investments.

Where India is losing: Vietnam captured far more of the China Plus One shift in electronics, textiles, and footwear — benefiting from existing infrastructure, lower wages, streamlined investment approvals, RCEP membership, and EVFTA with EU. Mexico captured North American supply chain manufacturing due to USMCA proximity. Bangladesh continues to dominate EU garment market despite India advantages in cotton and yarn.

The structural gaps India must close: (1) Logistics cost — approximately 13-14% of GDP versus 8% in China and 10% in Vietnam; (2) Labour flexibility — India labour laws remain complex versus more flexible frameworks in Vietnam and Indonesia; (3) Land acquisition timelines; (4) Investment approval speed; (5) FTA network gaps — RCEP non-member, no USA FTA, India-EU FTA not yet concluded.

India connectivity challenge is structural: landlocked from Central Asia and Russia by Pakistan to the northwest and China BRI influence from the northeast. The Chabahar Port project — India development of a port on Iran Gulf of Oman coast — is India strategic answer to this gap, providing a route to Afghanistan, Central Asia, and ultimately Russia and Europe through the INSTC.

The Chabahar route: Indian goods from JNPT or Mundra by sea to Shahid Beheshti Port in Chabahar, then road or rail to Bandar Abbas, then INSTC to Azerbaijan via Caspian Sea or through Iran to Russia, onwards to Europe. The route is approximately 14 days faster than the Suez Canal route for cargo destined for Russia and Central Asia. India has invested approximately USD 500 million in Chabahar Phase 1 development. USA sanctions on Iran excluded Chabahar from restrictions in 2018 recognising its development significance for Afghanistan and Central Asia.

Commercial corridors enabled: India-Afghanistan: Chabahar is the most practical route avoiding the Pakistan overland option. India-Central Asia: Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan have limited direct trade with India currently — Chabahar provides a viable route. India-Russia: post-2022 sanctions have complicated conventional routes and INSTC provides alternatives. India-Iran bilateral: Indian pharmaceuticals, agro-food, and engineering goods reach Iran through Chabahar under sanctions-exempt arrangements using INR payment mechanisms.

EU trade defence instruments — anti-dumping duties, countervailing duties, and safeguard measures — are legal under WTO rules and are increasingly used by the EU to protect domestic industry. For Indian exporters, EU anti-dumping measures represent an additional duty burden on top of MFN tariffs.

Current EU anti-dumping measures on Indian goods as of 2026: Stainless steel bars and rods: ADD of 10-19%. Citric acid: ADD subject to ongoing WTO dispute. Monoethylene glycol: ADD. Certain carbon steel pipe fittings: ADD. Ceramic tiles: ongoing investigation on specific tile types. These measures are product and producer specific — Indian exporters should check EU TARIC for their exact HS code before assuming they face ADD.

How Indian exporters can respond to anti-dumping investigations: Register as interested party when investigation is initiated. Complete Commission questionnaires demonstrating that your prices reflect genuine costs not dumping. Request hearing with the Commission. Submit economic arguments. Individual companies receiving individual dumping margins through good cooperation can obtain rates significantly lower than the all-others residual rate.

India-EU FTA and trade defence: India-EU FTA will not automatically eliminate anti-dumping measures — these are treated separately from tariff concessions. The FTA bilateral safeguard mechanism may partly substitute for ADD in some sectors. A trade defence dialogue mechanism will be included in the FTA for bilateral coordination.