Putri, Mia Utami (2025) THE EFFECT OF THE US-CHINA TRADE WAR ON THE INCREASE OF FDI INFLOWS IN INDIA'S MANUFACTURING SECTOR. S1 Undergraduate thesis, Universitas Darussalam Gontor.

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Abstract

The US-China trade war in 2018-2019 created global economic uncertainty due to the increased tariffs both countries applied to their imported products, especially in the manufacturing sector. These tariff increases caused significant losses for US companies, especially those that depend on raw materials and components from China. As a result, some multinational companies (MNCs) such as Apple have started diversifying heir foreign direct investment (FDI) by shifting their production from China to other countries to avoid the economic risks posed by the trade war. As one of the countries with a rapidly growing manufacturing sector, India is a strategic destination for companies looking to reduce dependence on China. India's manufactured products have similarities with the products China exports to the US, allowing India replace China's position in the US. In addition, pro-investment policies through the Make in India program make India more competitive in attracting foreign investment. This research seeks to determine the extent to which the US-China trade war has contributed to increased foreign direct investment in India's manufacturing sector, through the lens of Interdependence Liberalism and FDI theory. This study uses a qualitative method with data collection techniques through library research based on secondary sources. The results showed that based on the perspective of Interdependence Liberalism, the US-China trade war did not eliminate economic dependence between countries, but instead created a shift in the pattern of interdependence through diversification of FDI from China to India. In addition, India's pro-investment policy Make in India, became a major factor in attracting foreign investors amid global economic instability, so the increase in FDI during the trade war period further strengthened India's position in international trade.

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