India’s China+1 opportunity lies in becoming a trusted global manufacturing partner by leveraging scale, policy reforms, and execution excellence.
Manoj Joseph
Member, MMA Managing Committee & Managing Director, Thejo Engineering Ltd
The global supply chain landscape is undergoing a profound transformation. Rising geopolitical tensions, trade realignments, and the quest for resilience have pushed multinational corporations to diversify beyond China — a strategy now widely termed China+1. What began as a contingency plan has evolved into a structural imperative. In 2025, giants like Apple, HP, and Dell shifted production to India, Vietnam, and Mexico, seeking resilience, lower costs, and reduced geopolitical risk.
For India, this moment is particularly consequential. India has emerged as a pivotal player offering scale, a growing manufacturing ecosystem, skilled labour, and a youthful demographic — with 28.4% of the population under the age of 30. Electronics production alone has surged from ₹2.13 lakh crore in FY 2021 to ₹5.25 lakh crore in 2025 under PLI support, signalling genuine industrial deepening. India’s services backbone in IT, logistics, and finance adds a competitive layer that pure manufacturing rivals cannot easily replicate. Even in defence manufacturing, India is emerging as a credible exporter, with BrahMos missiles already shipped to the Philippines.
Yet challenges remain. Replicating China’s deeply integrated ecosystem, built over decades, cannot be achieved in a few policy cycles. Logistics costs, land acquisition hurdles, and regulatory divergence continue to raise the cost of doing business. To seize this opportunity, India must urgently convert its demographic and policy advantages into world-class manufacturing infrastructure before competitors like Vietnam and Indonesia consolidate their own positions.
Dr Frank N. Pieke
Dutch Cultural Anthropologist & Expert on Modern China | Visiting Research Professor, East Asian Institute, National University of Singapore
To understand China’s role in the global supply chain realignment, one must first understand the nature of Xi Jinping’s administration. Xi came to power deeply distrustful of his predecessors, publicly calling them people who had brought the Chinese Communist Party to the brink of extinction. His response has been to rebuild the Party as a strong, unified, disciplined organisation capable of making China rival the United States. China approaches geopolitics and economics the way an athlete approaches the Olympics — there is only one prize, the gold medal, and everything else is irrelevant. That mindset drives both their ambitions and their vulnerabilities.
Contrary to popular perception, China is an extremely decentralised country — in many respects more so than India. The central government sets policy preferences, but the actual doing happens at the provincial level. Chinese provincial leaders are not politicians seeking electoral mandates; they are seasoned administrators with 30 to 40 years of career experience who operate against clearly defined KPIs. When you engage with a governor or party secretary in China, you are dealing with someone whose command of the subject rivals that of a very good businessman. That is a critical fact for Indian companies and policymakers to appreciate.
On the economy, China’s banking and financial system stands at roughly $60 trillion — three times the size of the country’s entire GDP. This is unparalleled anywhere in the world. What this means practically is that China is sitting on enormous capital that needs an outlet. For businesses globally, and for smart Indian operators, the insight here is that capital costs are very low in China and that money is actively seeking returns. China’s growth model has shifted from Keynesian consumption-driven growth to supply-side economics driven by innovation. Whether this model delivers remains to be seen — but expect no policy change after the 2027 party congress.
Dr P S Srinivas
Visiting Research Professor, East Asian Institute, National University of Singapore
Our research is grounded in 50 structured interviews conducted under Chatham House rules with C-suite executives across manufacturing and service sectors — global companies, Indian companies, and Chinese companies — as well as senior policymakers. The central thesis is this: India is not replacing China. It is becoming a strategic complement in global firms’ China+1 strategies. This is portfolio diversification, not decoupling.
China+1 emerged in the early 2000s as firms diversified away from rising coastal Chinese labour costs. It exploded after 2018 with the US–China trade war, COVID-19 factory stoppages, and the weaponisation of supply chains. Single-country dependencies became national security issues. The outcome is a portfolio strategy that adds resilience, redundancy, and optionality — while keeping significant China presence. For most firms, the goal is not China replacement but multi-node production networks that include India.
India matters because of its scale, talent, and policy traction. With a 1.4 billion domestic market and a median age of 29 — compared to China’s 41 — India justifies capex investment that smaller nations simply cannot support. PLI schemes are delivering; electronics components have surged from near zero to approximately $25 billion. Apple’s India story is well-known. Several interviewees told us that PLI made the difference between pilot and scale. Crucially, unlike Vietnam or Thailand, India offers both production scale and market demand. That combination is unique.
Where India falls short is equally clear. Bureaucratic complexity across central and state levels remains a persistent frustration. Actual power costs for businesses run 20% or more higher than comparable Chinese rates, despite what on-paper comparisons suggest. Logistics costs as experienced by companies are significantly above the government’s reported 8% of GDP figure. Sixty per cent of India’s FDI flows into just four states — Maharashtra, Karnataka, Gujarat, and Tamil Nadu — signalling deep unevenness in governance and ecosystem development. And supply chain depth takes five to ten years to build, even with sustained focus.
India is chosen as a China+1 destination when firms need a second node serving a large domestic market with potential to deepen supply chains over time — not because it is the cheapest alternative to China. The path forward requires calibrated openness, lower operating friction, stronger state-level execution, accelerated implementation of trade agreements, and sector-focused strategy. India should not try to do everything everywhere all at once. It should focus on sectors where it can move up the value chain — from assembly to integrated manufacturing plus services. The question for India is not whether it can replace China. It cannot, not in this decade. The question is whether India can become the most credible complement to China in global supply chains. The answer is yes — subject to sustained policy and execution.
Josh Foulger
President, IT Hardware and New Projects, Dixon Technologies India Limited
Having listened to Mr Manoj, Dr Frank, and Dr Srinivas, I want to tell you there was a remarkable convergence between what they shared and what I see on the ground. Let me add some colour from someone who has been running manufacturing operations in India for over three decades.
Globally, we are moving from a world of convergent, flat standards to one of divergence. G7 is effectively becoming G2 — the US and China — with India still on its way in. The tit-for-tat between the two superpowers is accelerating: US export controls, China’s Article 834 and 835 restricting technology transfers, competing 6G standards, and the building of duplicate capacity across the world. What China+1 really represents is the world’s reaction to this divergence — and India is one of its main beneficiaries.
I want to make a point about ambition. Twenty-five years ago, I had dinner in Guangzhou with a Chinese supplier when China’s economy was perhaps $1 to $1.5 trillion. He told me that Guangdong province wanted to be bigger than Japan, which was the world’s second-largest economy at the time. Today, Shanghai alone is $870 billion. That is the power of ambition matched with execution. When I came back to India to start Nokia, I was 34 years old and genuinely petrified. We built something on 220 acres in Sriperumbudur, brought in BYD and Foxconn as suppliers, and at peak in 2011 we were packing 1.5 million phones in a single day to 110 countries — and running 8 to 10% cheaper than China on bill of materials. India can create islands of excellence. Tamil Nadu already has one of the most valuable supply chains in the world today.
At Dixon, we are now India’s largest electronics manufacturer, ranked 13th globally at approximately $5 billion in revenue. Much of that growth has happened in the last five years, and it is a direct tribute to Indian government policy and our execution of it. We have 25 locations across India, 6.5 million square feet of manufacturing space, and we are building India’s largest computer factory in Oragadam. The message is simple: it can be done. India must approach global brand companies the way it approached Apple — pragmatically, with commitment, and with the ambition to be not just a vendor but a strategic partner in their global value chain.
