India and Vietnam largest beneficiaries of China-plus-one, says Nomura

As multinational companies recognize the importance of diversifying supply chains, India and Vietnam are emerging as key beneficiaries. The electronics and machinery sectors in India are likely to see rising exports in the coming years, says Nomura.

CNBC-TV18, Money Control, and the Economic Times citing Nomura, reported that India's exports are expected to grow at a compound annual growth rate (CAGR) of 10%, reaching US$835 billion by 2030, compared to US$431 billion in 2023. Vietnam's exports are projected to grow at a CAGR of 11.4% through 2030, with Mexico also seeing gains. China's role in global value chains is evolving, leading companies to explore other options.

A significant portion of investments in India comes from the US and developed Asian countries. While strong enthusiasm exists for India's potential, investors are advised to be patient in the short term. India is expected to see export-led investments in electronics, automobiles, capital goods, semiconductors, energy, and pharmaceuticals.

Nomura predicts that electronics will become the fastest-growing sector in India, with exports increasing at a compound annual growth rate of 24%, nearly tripling to US$83 billion by 2030. Machinery exports are also expected to more than double, rising from $28 billion in 2023 to $61 billion by 2030.

"The shift in supply chains away from China has triggered what economist Kaname Akamatsu described as the wild-geese-flying pattern of economic growth. This pattern sees production move from the leading nation to developing countries," explained Nomura.

Data from the Department for Promotion of Industry and Internal Trade of India shows that over the past years, computer software and hardware has become one of the largest sectors attracting foreign investments. The industry had an accumulated foreign equity inflow of US$98.33 billion during 2000 and 2023, behind just the services sector.

Source: DPIIT, May 2024