Look beyond China to diversify supply chains: FM to investors

While noting that not all global companies would look at moving out of China, Sitharaman said diversifying the supply chain is a “far more prudent way” of continuing in business. “…however much we might think that supply chains would have to be moved out of China, it may not be the case. China and others could possibly be the realistic solutions. So even as China is reopening after the zero-tolerance and everything, I still think there would be a lot of investment and manufacturing interest going back to China or restoring themselves in China. So it will be unrealistic to think everything will get out of China. But yet, the shock that had happened in terms of disruptions in the supply chain justifies more than one location and countries like India would be the best in terms of the skill sets that Indians, particularly the youth, have,” she said.

She further said that other countries like Vietnam and Indonesia are also pitching with the same tone. “It just sends a very strong message that the world didn’t notice earlier or didn’t want to choose earlier. That is, spreading your resource basket of supply chain is a far more prudent way of continuing in business, however much the cost complications make it difficult in other places, and cost-benefit makes it possible to concentrate in one jurisdiction,” she said.

She also said that the government is reaching near saturation in providing the basic facilities in India, adding that the government’s approach is to empower the poor with at least the basic amenities. She also mentioned the resilience of Indian people to take it upon themselves to take the challenge and come out in their businesses despite tragedies at home during the pandemic.

On World Trade Organization (WTO), Sitharaman said it needs to give more space to countries with something different to say and not just hear. “WTO should be more open about issues. WTO has to be progressive and fair to all members. It has to give voice to all and not just hear but also heed,” she said.

Sitharaman also discussed developing a common framework for all countries to deal with cryptocurrency risks under India’s G20 presidency. “Cryptocurrencies are a very important part of the discussion under the G20 India presidency, given so many collapses and shocks in cryptocurrencies. We seek to develop a common framework for all countries to deal with this matter,” she said.

The finance minister also said G20 is trying to unite all countries to address debt distress in middle-income and low-income nations like Sri Lanka and Ghana. “In G20, there is an opportunity for India to bring all countries together to address debt distress in middle-income and low-income countries. Multilateral institutions are coming up with resolutions for debt-laden countries in 3-5 years,” she said.