Manufacturing & China+1 Strategy: how Indian companies are gaining global share

Multi National Companies (MNCs) are using the China+1 strategy to diversify their supply chains and reduce their dependence on China, and India is the biggest beneficiary of this strategy because of its cost competitiveness, talent, and government support. The China+1 strategy has increased the global share of India's manufacturing exports, especially in the electronics, auto, and pharma sectors. As of now, the manufacturing sector in India appears to be quite resilient with increased technological intensity and improved global rankings.

What is the China+1 strategy?

The China+1 strategy involves the addition of new locations for manufacturing to complement, but not substitute, China, thus mitigating the risks associated with geopolitical tensions, disruptions, and rising costs. The goal is to have supply chain resilience, quality, scalability, and maintain the cost advantages of China. India is a perfect fit, given its strengths in engineering, improvements in infrastructure like ports and industrial parks, and the younger generation's adoption of technology standards.

Why India leads the shift

The country has a huge domestic market, besides the captive market and export markets, which are expected to touch $835 billion by 2030, as opposed to $431 billion in 2023. The government’s initiatives in 14 sectors, including Production Linked Incentive schemes, have already witnessed investments of ₹2.16 lakh crores, sales of ₹20.41 lakh crores, and the generation of over 14 lakh jobs by the end of 2025. The exports in the electronics sector have registered a 47% jump in Q1 FY26, with the US, UAE, and other countries being major export markets, while the imports of mobile phones have registered a 77% decline since 2020. The country has moved up to the 37th position in the Competitive Industrial Performance Index in 2023, while technology adoption, including AI, stands at 65% in the manufacturing sector.

Key sectors and Indian winners

Indian firms are capturing global share through PLI-backed localisation and partnerships.

These players benefit from deeper value chains, from PCBs to modules.

PLI scheme impact

Production-linked incentive (PLI) scheme’s ₹1.91 lakh crores budgetary support links incentives to incremental sales, encouraging scale and exports such as ₹8.3 lakh crores cumulatively. It includes electronics (mobile devices), solar photovoltaic (48 GW capacity), white goods (75-80% localization by 2029), and textiles. Budget 2026 allocations for semiconductors (₹1,000 crores) and electronic components (₹1,500 crores) continue the momentum. This has placed India as a high-value destination in the wake of global shifts.

Conclusion

The share of the GDP of manufacturing in India stands at 16-17%, with logistics costs being halved to reach Chinese levels, and supply chains becoming established. Among the priorities of the states are textiles, as well as essentials to drive employment, with exports of electronics having the potential to triple to $83 billion by 2030. There are, of course, challenges to be overcome, such as vocational training, but the support dynamics and the complementarity of China+India can be seen as providing the basis for continued success in the global economy. This is of interest to investors due to their desire to see long-term growth in a decoupled world.