China-plus-one remains relevant; India’s competitiveness will go up as reforms build up: CEA

However, he added that India will have to work harder to take advantage of the opportunity. Nageswaran said removal of the tariffs will make that choice easier for businesses looking at a supply chain revamp.

“These are, however, decisions taken by businesses with a longer time horizon of a decade or two or three, and the tariffs may not last that longer. From that perspective, the China-plus-one framework still remains very relevant for global business," said Nageswaran.

India’s exports to the US are currently subject to steep tariffs of 50% on most goods, following a series of actions by the Trump administration in 2025.

Initially, reciprocal tariffs of 25% were applied to Indian imports, effective from 6 August, and an additional 25% penal tariff was later imposed for buying Russian oil, taking effect from 27 August.

A wide range of Indian products—including labour-intensive goods such as textiles, gems and jewellery, leather, marine products, chemicals and engineering goods—face the highest tariff imposed on any major trading partner, excluding Brazil, which is facing similar tariffs.

However, certain sectors such as pharmaceuticals, electronic goods and energy products remain exempt from these duties.

In contrast, Chinese exports face a 30% US tariff under a truce framework reached in late 2025.

To a question on implementing the reforms the Economic Survey recommended to make India’s manufacturing more globally competitive and innovation-driven, Nageswaran said it would be a long-term process with no fixed timeline, but as reforms get built up, India’s competitiveness will go up.

“In the last 12 months, we have been demonstrating our reform intent, including facilitating research and development, and continuing public investments, all of which will contribute to competitiveness. Over time, policy actions and decisions will result in economic outcomes that we are looking for," said Nageswaran.

The CEA said outcomes would be influenced by multiple factors beyond the government’s control and the government’s focus should remain on actions within its control, rather than attempting to predict outcomes.

Nageswaran’s recommendations come at a time when global supply chains are being reshaped not just by cost considerations, but also by geopolitics, technology controls and national security concerns, raising the bar for countries seeking to attract long-term manufacturing investment.

Pointing to post-covid trends, the CEA said that India has been able to achieve strong growth alongside a declining inflation rate, partly due to public investment decisions in infrastructure and digital infrastructure, improved credit access to SMEs, and deregulation initiatives.

On whether reforms aimed at making manufacturing more competitive are politically easier to implement than other reforms such as land reforms, which lie in the domain of states, the CEA said that different reforms naturally require different levels of effort.

He cautioned against speculating on which reforms will have what kind of impact, noting that even policies announced and legislated several years earlier may take time to be notified and implemented.

The CEA also referred to steps outlined in the Economic Survey, including facilitating research and development through funding mechanisms such as the RBIF and ANRF, and continuing with public investment, saying that these measures would, at some point, show up in competitiveness, even though establishing one-to-one causality would be difficult.

On free trade agreements, the CEA pushed back against attempts to pre-identify ‘binding constraints’, saying it is necessary to learn about constraints through experience rather than labels. He emphasised that costs matter, and that lowering costs is central to improving competitiveness in the context of FTAs.