Economic Survey (2023-24) suggested that Foreign Direct Investment (FDI) from China could be leveraged to benefit from ‘China plus one Strategy’. 

China Plus One Strategy 

• It refers to practice of international businesses active in China coupling their investments with a second facility, generally in another Asian economy. 
• It was driven by disruption due to China’s zero-COVID policy, growing tensions between the US and China, rising labour costs in China, etc.
• Beneficiaries 
  • Mexico, Vietnam, Taiwan and Korea were direct beneficiaries of US’s trade diversion from China. 
  • India could capitalize on this strategy by either integrating into China's supply chain or encouraging Chinese FDI, with the latter being more advantageous as: 
    • Due to the growing trade deficit with China, it is more effective to have Chinese companies investing in India for export than India importing Chinese goods to re-export with little added value.
    • Many current beneficiaries have also increased FDI inflow from China.

Concerns Associated with Chinese FDI in India

• Border Dispute: Ongoing military tensions and China’s tendency to exert regional supremacy. 
• Security Risks: Chinese FDI could open the door to espionage, supported by its laws like the National Intelligence Law, which mandates cooperation with national intelligence efforts.
• China’s support for Pakistan