China+1 Strategy: Why India Is Emerging as the Leading Alternative

Over the past two decades, China has become the world’s factory. But global businesses are now rethinking the risks of relying too heavily on one country. Whether due to rising labor costs, trade tensions, supply chain disruptions, or political uncertainty, many companies are turning to the China+1 strategy — maintaining operations in China while expanding into another country to diversify risk.

And increasingly, that “+1” is India.

This article explains why India has become a top choice for companies adopting the China+1 approach, how its manufacturing ecosystem has evolved, and what businesses should consider when diversifying their supply chains.

What Is the China+1 Strategy?

The China+1 strategy is a global sourcing and manufacturing approach where companies continue production in China but add a secondary country to:

• Reduce dependency on a single supplier or country

• Improve resilience to political, economic, or logistical disruptions

• Optimize costs and diversify labor sources

• Navigate tariffs or regulatory restrictions in key markets (e.g. U.S. or EU)

This isn’t about moving everything out of China — it’s about building smarter, more balanced supply chains.

Why India Is Emerging as the Top “+1”

As of 2025, India is consistently among the top three alternatives companies evaluate when considering the China+1 strategy — alongside Vietnam and Mexico. But India is increasingly winning long-term investment thanks to several key advantages.

1. Scale and Workforce Availability

India has the world’s largest population (over 1.4 billion) and a workforce of 600+ million. It graduates more than 1.5 million engineers annually, providing a strong base for technical manufacturing sectors.

2. Competitive Labor Costs

Labor costs in India remain well below China.

• As of 2024, India’s average monthly manufacturing wage is $240–$280, compared to $650–$700 in China.
  (Source: Statista Manufacturing Wage Report, 2024)

This gap is especially important for labor-intensive sectors like textiles, assembly work, and consumer goods.

3. Government Support for Manufacturing

India’s Make in India campaign and Production Linked Incentive (PLI) schemes have led to billions of dollars in domestic and foreign investment. Sectors that benefit include:

• Electronics

• Solar and renewable energy

• Automotive and EV components

• Pharmaceuticals

• Textiles and apparel

By 2025, over 500 manufacturing units had been approved under PLI schemes, with an expected output of $150 billion by 2027.
(Source: Invest India, April 2025)

4. Free Trade Advantages

India has signed or is negotiating Free Trade Agreements (FTAs) with the EU, UK, Australia, UAE, and Canada. Many of these agreements offer better duty structures compared to China.

For example:

• EU-India FTA (expected to finalize in 2025) will reduce import duties on key industrial products.

• India’s UAE CEPA already eliminates customs duties on 80% of Indian goods.

5. Infrastructure and Port Expansion

India has invested heavily in logistics:

• Dedicated Freight Corridors (DFCs) to connect industrial zones

• Sagarmala port development program improving export turnaround

• Smart industrial parks and plug-and-play zones across Tamil Nadu, Gujarat, Maharashtra, and Uttar Pradesh

This makes India far more export-ready than it was even five years ago.

India vs. Other China+1 Options

India stands out when you need both manufacturing capacity and access to a large domestic market.

What Sectors Are Moving to India?

Electronics

Apple, Samsung, Foxconn, and Dixon Technologies are now producing smartphones, wearables, and components in India.
India is expected to export $120 billion worth of electronics by 2026.
([Source: MeitY, Ministry of Electronics & IT, 2025])

Renewable Energy Equipment

India now ranks 4th globally for solar manufacturing capacity, and production of panels, inverters, and batteries is growing rapidly.

Textiles & Apparel

India is already the second-largest textile producer in the world and is gaining orders from brands diversifying away from China and Bangladesh.

Engineering Components

Cities like Rajkot, Pune, and Coimbatore are hubs for precision components, castings, automotive parts, and tooling.

Challenges of Moving to India (and How to Overcome Them)

While India offers tremendous opportunities, it’s not without challenges:

Supplier Discovery & Vetting

Many high-quality suppliers don’t appear in online directories or speak fluent English. India2West solves this by pre-vetting factories and managing communication directly.

Quality Control

Consistency can vary. That’s why we run:

• Factory audits

• First article inspections

• Pre-shipment QC

• Independent lab testing (when required)

Infrastructure Gaps

While India has made great strides, certain remote regions may still lack export-grade logistics. We help you select regions with proven export capabilities.

Final Thoughts

If you’re exploring the China+1 strategy, India is no longer just a “promising alternative” — it’s already proven itself as a reliable, scalable, and strategic partner for global manufacturing.

Whether you’re looking to shift part of your supply chain, set up dual sourcing, or enter India’s domestic market, India2West offers local expertise and Western-standard support to make the transition smooth and successful.

Contact India2West today to explore how we can help you build a smart, India-backed supply chain.