According to Nomura, India and Vietnam are experiencing the greatest benefits from the China plus one strategy, which is anticipated to create new growth prospects for Asian economies.

Nomura's report suggests that India's exports are projected to soar to $835 billion by 2030 from $431 billion in 2023, with its expansive domestic market attracting firms seeking supply chain alternatives to China.

Nomura stated that firms in various sectors such as electronics, apparel & toys, automobile & components, capital goods, and semiconductor manufacturing are showing interest in investing in India. They are drawn to India not only because of its large domestic consumer market but also due to the potential of tapping into this captive market. Nomura predicts a 10% annual growth rate over the period.

The global research firm anticipates electronics to emerge as the fastest-growing sector, with exports projected to grow at a compound annual growth rate of 24%. The value of electronics exports is expected to nearly triple to $83 billion by 2030. Additionally, Nomura forecasts machinery exports to more than double, reaching $61 billion by 2030 from $28 billion in 2023.

Nomura expressed the view that the current low levels of production-linked incentive (PLI) disbursements do not adequately showcase India's potential for integration into the global value chain.

The firm highlighted India's appeal as an investment destination due to factors such as its substantial market size, rapid economic growth, competitive labour costs, and political and economic stability. Nomura anticipates India's share of global trade to increase to 2.8% by 2030.

Nomura highlighted that the competitiveness of Indian production is expected to bolster exports and enhance the country's trade balance and current account. The firm suggested that this scenario presents a structural case for currency appreciation.

In addition, Nomura's survey of 130 enterprises indicated a growing interest in both India and Vietnam.

Nomura stated that the majority of investments in India originate from US-based companies, particularly in the electronics sector. Additionally, Japan and Korea are actively investing in India's automotive, consumer durable, and electronics sectors, aiming to leverage the expanding domestic demand and utilise the country as a manufacturing hub.

Furthermore, Nomura emphasised that the bolstering of India's manufacturing sector and its increasing contribution to exports will enable the corporate sector to maintain a sustained earnings growth of 12-17% over the medium term.

Image source: The Economic Times