India’s manufacturing landscape and global trade opportunities have evolved over decades, influenced by domestic reforms, global shifts, and geopolitical developments. The China Plus One strategy, aimed at diversifying supply chains beyond China, offers India a chance to strengthen its role in global manufacturing.
1. China’s Rise as a Manufacturing Hub: Starting in the 1980s, China’s reforms attracted global manufacturers with low costs, a skilled workforce, and strong infrastructure. This created an overreliance on China in global supply chains.
2. India’s Manufacturing Challenges: While India liberalized its economy in 1991, its manufacturing growth lagged due to insufficient infrastructure, complex regulations, and low ease of doing business. Despite some progress, India struggled to compete with Southeast Asian countries like Vietnam and Thailand.
3. Emergence of the China Plus One Strategy: Companies began diversifying their supply chains due to risks of overdependence on China. Rising labor costs in China, geopolitical tensions, and supply chain disruptions—particularly during the COVID-19 pandemic—accelerated this shift.
4. India’s Policy Initiatives: India introduced the Production Linked Incentive (PLI) schemes, simplified labor laws, and invested in logistics to attract global manufacturers. However, progress in signing Free Trade Agreements (FTAs) and addressing compliance costs has been slow.
5. Trump’s Tariff Policies: Donald Trump’s tariffs on Chinese goods and other trade partners in 2018 further fueled the global shift towards the China Plus One strategy. Trade diversion created opportunities for nations like India, but countries such as Vietnam, Thailand, and Malaysia moved faster to capitalize.
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