Can India overtake China in the global supply chain?

The "China+1" strategy, a business diversification approach where firms establish manufacturing bases beyond China in countries like India, Vietnam, Thailand, and Malaysia, has gained momentum amid shifting global supply chains. India, with its growing industrial base and strategic policy reforms, is emerging as a strong alternative for global manufacturers. Rising capital inflows into the manufacturing sector, coupled with government incentives and industrial corridor developments, are driving India's ascent in global value chains. Yet, bottlenecks in logistics infrastructure, regulatory inefficiencies, and rigid labor policies present key hurdles to its long-term manufacturing competitiveness.
India’s Supply Chain Resilience and Growth
The Indian government has implemented several initiatives to bolster the country’s manufacturing sector, including the Production-Linked Incentive (PLI) scheme, Make in India, and infrastructure development projects. These measures have attracted significant foreign direct investment (FDI) in sectors such as electronics, automobiles, and pharmaceuticals. Major global players, including Apple, Tesla, and Samsung, have increased their presence in India, signaling confidence in its long-term manufacturing potential.
Additionally, India benefits from a young workforce and a cost-competitive labor market. The country’s vast domestic market further strengthens its appeal as companies can leverage both export opportunities and local demand. Supply chain partnerships with ASEAN, the United States, and European markets are also reinforcing India’s role in global trade networks.
Despite ongoing reforms, India's manufacturing sector continues to be weighed down by infrastructure constraints that impede supply chain efficiency. The country faces higher logistics costs compared to China due to fragmented transport networks, slow-moving freight corridors, and procedural delays at customs. Although government-led investments in roads, railways, and ports have improved trade facilitation, a more comprehensive approach is required to enhance supply chain resilience and attract long-term foreign investment.
Labor policies also present challenges. While India offers a large workforce, skill gaps persist, especially in advanced manufacturing sectors. Unlike China, which has developed an extensive network of skilled labor through vocational training programs, India needs to expand its upskilling initiatives to meet industry demands. Regulatory complexities and rigid labor laws have also deterred some foreign investors, although recent labor reforms aim to address these concerns.
Global Trade Policies and Geopolitical Factors
India’s manufacturing growth is also shaped by global trade policies and geopolitical dynamics. The country’s cautious approach to free trade agreements (FTAs) has limited its access to some global markets, making its exports less competitive than China’s. However, strategic partnerships such as the Indo-Pacific Economic Framework (IPEF) and strengthening trade ties with the US and Europe could enhance India’s position in the global supply chain.
Geopolitical shifts, including the US-China trade war and global concerns over an overreliance on Chinese manufacturing, have created opportunities for India. Many companies are seeking to de-risk their supply chains by diversifying production, and India stands to gain if it can offer a stable, predictable, and business-friendly environment.
While India’s manufacturing sector has made considerable strides, overtaking China in the global supply chain remains a formidable challenge. The success of India’s industrial growth depends on continued policy support, infrastructure development, labor reforms, and integration into global trade networks. By addressing these critical issues, India has the potential to solidify its position as a manufacturing powerhouse and an essential player in the evolving global supply chain landscape.
Can India rise to the opportunity and become the world’s next manufacturing growth driver? Or will the structural challenges prove too difficult to overcome? The coming years will be crucial in determining whether India can truly take center stage in the evolving global supply chain.

(Business Correspondent)