- Uday Kotak urges India to remain open to Chinese investments amid US trade tensions
- He advocates manufacturing partnerships between Indian and Chinese companies to boost growth
- Kotak stresses India must produce more and reduce reliance on adversary countries
As trade tensions with the United States complicate India's trade outlook, veteran banker Uday Kotak called for a more pragmatic approach towards Chinese capital, arguing that India should remain open to investments and manufacturing partnerships rather than rely too heavily on Western funding. Speaking at the Bloomberg New Economy Forum in New Delhi on Tuesday, Kotak said India needs to keep its options open as global trade relationships are constantly shifting and tariffs are increasingly becoming instruments of economic policy.
"If you can't beat them, join them," he said, referring to China.
Kotak said India was refocusing on manufacturing and that partnerships between Indian and Chinese companies could help accelerate this move. He pointed to early signs of Indian companies partnering with Chinese counterparts and said joint ventures could also provide a way forward. This comes as India seeks to strengthen its manufacturing base amid shifting global supply chains and growing uncertainty over trade with the US. Kotak said India had historically looked too much towards the West for investment and should adopt a more transactional approach to attracting capital.
"In a world where tariffs are a weapon, Chinese strategics may be more open to come and invest in a domestic situation," he said, suggesting that Chinese companies could increasingly consider manufacturing investments in other markets.
India Needs To Produce, Not Just Consume
Beyond the choice of investment partners, Kotak said India needed to focus on producing what it consumes and building the capacity to reduce dependence on countries it considers adversaries. His analysis goes beyond attracting factories: India needs to strengthen its ability to manufacture at scale, become more competitive in research and innovation, and develop domestic capabilities rather than depend primarily on consumption-led growth.
Keeping Chinese investment open, he says, would give India another potential source of capital, technology and manufacturing partnerships. Kotak's position is that India should retain flexibility rather than rule out investment options as geopolitical relationships evolve.
Kotak also offered a view on the rupee, saying it should find its own level and that India's underlying economic strength would play out over time. He argued that India's market weakness reflected more of a portfolio-flow problem than a current-account problem. In his assessment, foreign investment had been concentrated in just seven to 10 stocks, making market flows vulnerable when investors changed direction. Kotak described the current period as a transition phase. For India to sustain its economic ambitions, he said, greater competitiveness in research and innovation would be important.
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