India-US Trade Deal to Boost China+1 Strategy, Says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman has said that the recently signed India-US trade agreement will help the China+1 strategy gain momentum, as Washington cut tariffs on Indian imports to 18%.

In an interview with Hindustan Times, Sitharaman said the deal marks the end of months of tense negotiations and is expected to provide major relief to Indian exporters.

“It is a very welcome move and will be a big relief to our exporters,” she said, adding that the agreement would improve India’s competitiveness against rival manufacturing hubs.

She expressed confidence that the pact would encourage global companies to diversify their supply chains and reduce dependence on China.

“After last night’s conversation, I think things will change. You will see the China+1 strategy play out fully now,” Sitharaman said.

The China+1 strategy encourages businesses to expand manufacturing and investment beyond China by adding at least one alternative country. The concept gained traction after 2013, when concerns grew over the risks of excessive concentration in Chinese supply chains.

India is among 18 major economies that have aligned themselves with supply-chain diversification efforts. Other popular China+1 destinations include Vietnam, Thailand and Indonesia.

Sitharaman also linked the trade deal to India’s efforts to attract greater foreign investment, especially at a time when capital inflows have slowed despite foreign exchange reserves crossing $700 billion.

“Capital inflows are reducing because some investors have booked profits and exited, and fresh investments are yet to come in,” she said, stressing the need to convince large global fund managers to invest in India.

She said the agreement with the US could help reverse this trend by restoring investor confidence.

Under the deal, US tariffs on Indian goods have been reduced from 50% to 18%. A significant portion of the earlier duties had been imposed as penalties over India’s oil trade with Russia.

US President Donald Trump has claimed that Prime Minister Narendra Modi assured him that India would end oil imports from Russia and commit to purchasing over $500 billion worth of American goods. However, Indian authorities have not officially confirmed these assertions.

The lack of clarity over these claims has raised questions about the long-term scope and implementation of the agreement.