India and Vietnam are becoming major beneficiaries of the China plus one strategy, with Nomura forecasting substantial growth prospects for Asian economies. A report by Nomura projects India's exports to surge to $835 billion by 2030, up from $431 billion in 2023, fueled by its expansive domestic market that draws companies looking to diversify their supply chains away from China.
India, alongside Vietnam, is emerging as a significant beneficiary of the China plus one strategy, which is anticipated to unlock substantial growth opportunities for Asian economies, according to a report by Nomura.
Nomura projects that India's exports are set to soar, reaching $835 billion by 2030, a dramatic rise from $431 billion in 2023. This surge is attributed to India's vast domestic market, which is increasingly attracting firms seeking supply chain alternatives to China.
"Firms in electronics, apparel & toys, automobile & components, capital goods and semiconductor manufacturing are looking to invest in India. Given India's large domestic consumer market, firms setting up shop in India are attracted also because of the captive domestic market," the report noted, predicting a robust 10% annual growth over the period.
The global research firm identifies electronics as the fastest-growing sector, with exports expected to achieve a compound annual growth rate of 24%. By 2030, the value of electronics exports is projected to nearly triple to $83 billion. Similarly, machinery exports are forecasted to more than double, reaching $61 billion by 2030, up from $28 billion in 2023.
Nomura emphasized that the relatively low disbursements under the production-linked incentive (PLI) scheme do not fully reflect India's potential in global value chain integration. The report highlights India's large market size, rapid growth, lower labor costs, and political and economic stability as key factors making the country an attractive destination for consumer goods production aimed at both domestic consumption and exports. Nomura expects India's share of global trade to increase to 2.8% by 2030.
The competitiveness of Indian production is likely to accelerate exports and enhance the country's trade balance and current account. "This points to a structural case for currency appreciation," Nomura stated.
A survey of 130 enterprises conducted by Nomura revealed a growing interest in India and Vietnam. "A majority of the investment into India are from US-based companies, especially in the electronics sector. Japan and Korea are also investing in India's auto, consumer durable, and electronics sectors to take advantage of the growing domestic demand and to use it as a manufacturing base," the report detailed.
Moreover, the strengthening of India's manufacturing sector and its increasing share in exports are expected to support the corporate sector in sustaining 12-17% earnings growth over the medium term.
With its strategic positioning and robust economic fundamentals, India is set to capitalize on new opportunities, driving growth and enhancing its role in the global economy.
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