The Big 5 Conglomerates and the Emerging Concerns

The quintet of India's business giants, namely the Reliance Group headed by Mukesh Ambani, Tata Group, Aditya Birla Group, Adani Group, and Bharti Telecom, are collectively referred to as the Big 5.

• Their rapid expansion has often come at the cost of smaller regional businesses.
• There are growing concerns about the potential for crony capitalism, excessive debt, and a stifling of innovation due to the exclusion of new competitors.
• Simultaneously, these conglomerates have enjoyed protection from international competitors thanks to the government’s high tariff barriers.
• Given India's high fiscal and cyclically sensitive current account deficits, the increasing monopoly of corporate power could lead to persistent inflation and create vulnerabilities in the external sector.

Decoding the China Plus One Strategy

• China's low labour costs, large workforce, and business-friendly environment have made it the top investment destination for companies worldwide.
• This led many sectors to establish factories in China or outsource their production to Chinese suppliers.
• However, a recent trend has seen companies diversifying their investments to other Asian countries like Indonesia, Thailand, Malaysia, the Philippines, Bangladesh, Vietnam, and India.
• The term "China Plus One" or "C+1" refers to this strategy of diversifying business operations outside of China instead of relying solely on Chinese investments.
• First used in 2013, the originator of the term remains unknown.

Reasons for the Shift to the China Plus One Strategy

• Geopolitical tensions: China has been facing escalating tensions due to various global sociopolitical issues, including the fight for Hong Kong's independence, anti-Japanese protests, and conflicts in the South China Sea.
• Rising labour costs: The 2010s saw a significant rise in China's minimum wages.
• Tax reforms: Consolidation of China's corporate tax system has led to increased tax rates for businesses operating in the country.

Implications for India

• The China Plus One strategy could be beneficial for India as it opens up new investment opportunities.
• India's abundant natural resources can meet the demands of both domestic and international metal industries.
• The shift of investments from China to other countries could give a significant boost to Indian exports, particularly in the electrical goods sector.
• Initiatives like the Make In India campaign further enhance India's appeal as an investment destination.
• The trend of divesting from China and investing in developing nations could significantly boost India's economic growth.