China+1 Strategy: How India is Emerging as a Global Manufacturing Hub

A Data-Backed Look at India’s Manufacturing Trajectory, Sector Opportunities, and the Practical Realities of Diversification in 2026

Introduction

Few strategic shifts in modern manufacturing have moved as quickly as the China plus one India conversation has over the past five years. Triggered by the COVID-19 disruption, sharpened by US-China trade tensions, and accelerated by post-2022 geopolitical realignments, global supply chain India coverage now sits in the boardroom of nearly every multinational manufacturer.

The headline outcomes are visible in verified data: India recorded provisional FDI inflows of USD 81.04 billion in FY 2024-25 (a 14% rise over the prior year), manufacturing FDI alone grew 18% year-on-year to USD 19.04 billion, and Apple’s iPhone exports from India crossed INR 2 trillion (~USD 23 billion) in calendar 2025, an 85% jump from 2024. India’s share of global iPhone production reached approximately 25% in 2025. The trajectory is unambiguous: shifting manufacturing to India is no longer an aspirational pitch, it is an active, measurable industrial movement.

Yet the same data carries a more nuanced second story. India is one of several destinations capturing diversified manufacturing, ASEAN nations attracted a record USD 225 billion in FDI in 2024, Vietnam’s electronics exports reached USD 165 billion in 2023, and Mexico continues to absorb significant nearshoring investment. China still produces well over 70% of the world’s iPhones, retains the world’s deepest component-supplier ecosystem, and has shown no intention of ceding low-value manufacturing voluntarily.

For companies evaluating manufacturing plant setup in India as part of broader supply-chain diversification plans. the right question is not ‘is India winning the China+1 race?’ but ‘where, in which sectors, and on what basis is contract manufacturing in India vs China genuinely competitive, and where is the case still being built?’

Drawing on Government of India data, industry-association reporting (ICEA, IBEF), and credible international sources (UNCTAD World Investment Report, ADB, World Bank, St. Louis Fed), this guide unpacks the verified facts behind India manufacturing in 2026. You will find a clear definition of the China+1 / friend-shoring / reshoring / supply chain diversification framework, a sector-by-sector view of where the shift is genuinely visible, a practical India-vs-China comparison for contract manufacturing decisions, an honest assessment of India’s remaining constraints, real-world case studies, and a frequently-asked-questions section addressing the operational realities companies are navigating in 2026.

Key Insight: Having supported feasibility studies, location analysis, supplier identification, and CapEx planning for manufacturing projects across multiple sectors and geographies, IMARC Engineering’s India manufacturing consulting teams have developed a structured methodology for evaluating India fit under China+1 strategies, translating headline opportunity into project-specific, risk-adjusted decisions. This guide distils that methodology into a framework companies can apply to their own diversification programmes, anchored in verified public data.

Table of Contents

• Introduction
• What the China+1 Strategy Actually Means
• Why Companies Are Moving Manufacturing to India in 2026
• The Numbers Behind India’s Manufacturing Rise
• Sector Spotlight- Where the Diversification Is Visible
• Contract Manufacturing India vs China- A Practical Comparison
• India vs the Other ‘Plus-One’ Destinations
• Challenges of Manufacturing Setup in India- Where India Still Has Work to Do
• Latest Manufacturing Trends in India 2026
• Conclusion

1. What the China+1 Strategy Actually Means

The China plus one India phrase has become so widely used that its precise meaning often gets lost. Distilled to its essentials: a China+1 strategy is a deliberate decision by a multinational manufacturer to retain meaningful production capability inside China while simultaneously establishing a parallel manufacturing footprint in at least one other country, to reduce concentration risk, hedge geopolitical exposure, and build optionality into the supply chain. It is not a wholesale exit from China. It is a portfolio approach to global production.

1.1 China+1, Reshoring, Friend-Shoring: The Vocabulary in 2026

Three related but distinct concepts dominate the 2026 supply chain diversification conversation. They are often used interchangeably in popular coverage but mean very different things in practice and have different implications for India.

1.2 What Triggered the Shift

The acceleration of the past five years reflects the convergence of multiple factors, not a single shock. Five reinforcing drivers are widely documented in industrial economics literature:

• The COVID-19 pandemic, which exposed the fragility of single-country sourcing and forced companies to revisit concentration risk
• Sustained US-China trade tensions- Section 301 tariffs, semiconductor export controls, the CHIPS Act, the Inflation Reduction Act
• The 2022 Russia-Ukraine conflict, which sharpened concerns over geopolitical exposure in supply chains more broadly
• Rising labour and compliance costs in China, eroding the pure cost-arbitrage rationale for manufacturing concentration there
• Technology and policy decoupling- outbound investment screening (US America First Investment Policy, February 2025), CFIUS scrutiny, and EU Foreign Subsidies Regulation

1.3 What China Plus One Is Not

Three persistent misconceptions are worth flagging up front, because they influence how Indian opportunity is sized and pursued. First, China Plus One is not the wholesale relocation of manufacturing away from China, global FDI to China remained at substantially elevated levels through 2023 (St. Louis Fed analysis of External Wealth of Nations data), even as ASEAN attracted a record USD 225 billion in FDI in 2024 (UNCTAD, World Investment Report).

Second, shifting manufacturing to India is rarely instantaneous, supply-chain depth (component suppliers, tooling, trained engineers) takes years to build, and many ‘relocations’ are in fact phased capacity additions. Third, India manufacturing alternative to China is sector-specific, India is genuinely competitive in some categories (pharma, electronics assembly, auto components), still building in others (semiconductors, advanced batteries), and structurally constrained in still others.

2. Why Companies Are Moving Manufacturing to India in 2026

Five structural advantages, each documented in verified public data, explain why India consistently appears on the shortlist of multinationals diversifying away from China.

2.1 Scale of Domestic Demand

India is the world’s most populous country and its fifth-largest economy. The domestic market itself, middle-class consumption, infrastructure spending, government procurement, provides a base load of demand that few competing destinations can match. For a multinational considering a parallel manufacturing footprint, India offers the rare combination of export-platform potential and a large addressable home market in the same geography.

2.2 Policy Tailwind- PLI, FDI Liberalisation, and Make in India

The Production Linked Incentive (PLI scheme), covering 14 strategic sectors with an outlay of INR 1.97 lakh crore (~USD 26 billion), is the single largest policy support architecture for manufacturing in India’s history. As of December 2025, the government has approved 836 PLI applications, attracted committed investments of over INR 2.16 lakh crore, generated cumulative sales above INR 20.41 lakh crore, supported exports above INR 8.3 lakh crore, and disbursed INR 28,748 crore in incentives (Ministry of Commerce & Industry release). The 100% FDI under the automatic route in most manufacturing sub-sectors and the March 2026 amendments to Press Note 3 (allowing non-controlling beneficial ownership of up to 10% via the automatic route, subject to safeguards) further reduce friction for inbound investment.

2.3 FDI Track Record

FDI inflows increased to USD 81.04 billion (provisional) in FY 2024-25, which is a 14% growth from USD 71.28 billion recorded in FY 2023-24. The amount is more than twice that of USD 36. 05 billion received in FY 2013–14, showing long-term progress. Manufacturing-specific FDI of USD 184.15 billion was attracted between April 2014 and March 2025, material progress in an area where India has historically lagged on sector-of-investment composition.

2.4 Skilled Workforce and Engineering Talent

India produces a large pool of engineering and technical graduates each year, a workforce advantage that becomes particularly relevant for design-led manufacturing, automation operations, electronics, IT-integrated production, and pharmaceuticals. English-language proficiency provides a further structural advantage for export-oriented and globally-integrated operations. Combined with average manufacturing wage levels significantly below those in developed markets, India’s labour-cost-and-capability profile is one of its strongest comparative advantages.

2.5 Geopolitical Alignment

India sits within a broad set of bilateral and multilateral alignment frameworks that materially affect investment flows, the QUAD, the India-EU Trade and Technology Council, the India-Australia ECTA, the India-UAE CEPA, and various technology and clean-energy initiatives with the US, Japan, and the UK. Investors value this alignment particularly in sectors where the home government applies investment-screening or supply-chain-security regimes. Friend-shoring, in practical terms, has been one of the most concrete tailwinds behind global manufacturers’ choice of India as a primary plus-one.

3. The Numbers Behind India’s Manufacturing Rise

Quantifying India’s manufacturing trajectory using only verified, publicly available data points give a clear picture of momentum, scale, and where the ground is genuinely shifting. The numbers below are sourced from PIB, Ministry of Commerce & Industry, RBI, UNCTAD, and major industry-press reports citing primary government data.

3.1 Headline Indicators

3.2 What These Numbers Tell Us

Three observations stand out. First, total FDI is at a multi-year high, and manufacturing FDI is growing faster than services FDI for the first time in many years, a structural shift in composition, not just a cyclical surge. Second, the geographic concentration of FDI (Maharashtra at 39%, Karnataka at 13%, Delhi at 12% in FY25) maps directly to the industrial-cluster geography that supports manufacturing investment, suggesting genuine capacity build-out rather than headline-only flows. Third, the scale of PLI commitment (INR 2.16 lakh crore) materially exceeds the original outlay (INR 1.97 lakh crore), confirming that the policy architecture has translated into real corporate decisions.

3.3 Greenfield Project Capex- A Forward-Looking Indicator

UNCTAD’s World Investment Report 2025 flagged India as a standout performer on greenfield project announcements: capital expenditure tied to new project announcements surged 22% to USD 114 billion during 2020-2024, with India participating in large-scale supply chain and semiconductor investments. Among the ten largest greenfield projects announced globally in 2024, four were in semiconductors, including one in India. This is one of the cleanest forward-looking indicators of where multinational manufacturing intent is being committed.

3.4 Manufacturing’s Place in India’s GDP

The Make in India initiative set an aspirational target of raising manufacturing’s share of GDP to 25%. The actual share has remained well below that target, typically in the mid-teens, and the government has periodically extended the timeline. This is an important honest framing: the headline FDI and PLI numbers are real, but the broader transition of the Indian economy to a manufacturing-led growth model is still a work in progress. For companies evaluating India, the implication is that they should focus on sector-specific and project-specific opportunity sizing rather than relying on macro narratives about India’s industrial transformation.

4. Sector Spotlight- Where the Diversification Is Visible

China Plus One capture is highly uneven across sectors. The five sectors below are where the verified data shows India absorbing the most diversified manufacturing, and where prospective entrants are likely to find the strongest ecosystem support.

4.1 Smartphones and Mobile Electronics- The Flagship Story

Smartphone manufacturing is unambiguously the headline India success of the past five years. Per PIB, and India Cellular and Electronics Association data, mobile phone exports from India grew 127× over a decade, from INR 1,500 crore in FY 2014-15 to approximately INR 2 lakh crore in FY 2024-25. Apple’s iPhone exports specifically crossed INR 2 trillion (~USD 23 billion) in calendar 2025, an 85% jump over 2024 (when exports stood at ~INR 1.08 trillion / USD 12.8 billion). Apple assembled approximately 55 million iPhones in India in 2025, about 25% of its global output of 220–230 million units.

The composition of supply has also shifted notably. Tata Electronics, having absorbed Wistron’s Karnataka plant and expanded operations at Hosur, Tamil Nadu, saw its share of India’s iPhone exports rise from approximately 13% in 2024 to 37–40% in 2025 (Canalys). Foxconn has committed USD 1.5 billion to a Chennai plant and is constructing a 13-million-square-foot facility near Bengaluru airport. The Electronics Components Manufacturing Scheme (ECMS), launched in 2025, is the structural successor to the original mobile PLI and is designed to deepen domestic value addition from the current 18-20% toward 30-35% over four years.

4.2 Pharmaceuticals- Structural Strength Pre-Dates China+1

Indian pharmaceuticals had global manufacturing leadership before China+1 became a phrase. The country supplies a substantial share of global generic drugs and is widely cited as the ‘pharmacy of the world.’ Under the PLI for pharmaceuticals (INR 15,000 crore outlay), pharmaceutical sales exceeded INR 2.66 lakh crore in the first three years of the scheme, with exports of approximately INR 1.7 lakh crore (per the Commerce Minister’s parliamentary reply). The bulk drugs / API PLI (INR 6,940 crore outlay) is the most strategically important sub-piece, explicitly designed to reduce India’s historic dependence on Chinese KSMs and APIs. The diversification opportunity here is durable, regulator-supported, and underpinned by a pre-existing manufacturing base.

4.3 Auto Components and EVs: A 2026 Inflection

Auto and auto-components have absorbed the largest committed-investment number in the PLI architecture: 85 approved applications, committed investments of INR 67,690 crore (~USD 8.15 billion), against an outlay of INR 25,938 crore. The Ministry of Heavy Industries’ FY27 budget allocation jumped 184% to INR 5,940 crore (from FY26 RE of INR 2,091 crore), a clear forward-looking signal of expected disbursement scale-up. Tata Motors, Mahindra & Mahindra, Bajaj Auto, TVS Motor, and Ola Electric are among named beneficiaries (Business Standard).

4.4 Specialty Steel and Metals

The specialty steel PLI attracted 79 applications from 35 companies, generating committed investments of INR 46,020 crore (Ministry of Steel data, summarised by RSM India). The second edition of the scheme, launched on 6 January 2025, expanded coverage to steel used in defence equipment and certain automobile applications. India’s natural-resource base, combined with Chinese export-rebate withdrawals on certain processed steel categories, has reinforced India’s positioning here. For diversifying buyers seeking resilient supply of specialty grades, India offers a credible alternative.

4.5 Solar PV and Clean Energy Manufacturing

Under the high-efficiency solar PV modules PLI, committed investments of INR 48,120 crore have been recorded by June, 2025, generating nearly 38,500 direct jobs. The two-tranche outlay (INR 4,500 crore + INR 19,500 crore) is targeted at reaching the goals of integrated manufacturing capacity. Combined with India’s climate commitments and global decarbonisation supply-chain demand, solar manufacturing is one of the cleaner China Plus One capture stories in clean-tech, even though the disbursement cycle is still in early stages.

4.6 Semiconductors- A Long-Cycle Opportunity

India’s semiconductor capacity-build is in early stages. Under the India Semiconductor Mission, six projects were already in execution as of mid-2025, with four additional manufacturing units approved by the Union Cabinet (Odisha, Punjab, Andhra Pradesh) under a INR 4,600 crore outlay. India’s inclusion among the four-out-of-ten largest greenfield semiconductor announcements globally in 2024 (UNCTAD) confirms it is genuinely on the global semi map, though the realised capacity, output, and export contribution will play out over multiple years rather than quarters.

5. Contract Manufacturing India vs China- Which is Better in 2026

For companies evaluating contract manufacturing in India vs China specifically, that is, the decision to outsource production to a third-party manufacturer in either geography, the comparison is genuinely sector specific. China retains a deep, mature contract-manufacturing ecosystem; India is rapidly building one. The matrix below summarises how the two compare across the dimensions that typically drive contract-manufacturing decisions, using publicly documented industry observations.

5.1 Side-by-Side Comparison

5.2 Where India Genuinely Wins

• Smartphone assembly and selected electronics- supported by Apple’s 25% global production share in India
• Pharmaceutical APIs and formulations- backed by India’s pre-existing GMP-compliant base and PLI for bulk drugs
• Auto components for global OEMs- driven by INR 67,690 crore committed investment under the auto PLI and FY27 184% budget jump
• Specialty chemicals and pharma intermediates- large-scale capacity in Gujarat clusters with deep export experience
• Specialty steel and select metals- INR 46,020 crore committed under the specialty steel PLI

5.3 Where China Still Has an Edge

• Deep component-supplier ecosystems for advanced electronics, batteries, and EV powertrains
• Tool-and-die, mould-making, and precision-engineering depth at scale
• Speed of new-product introduction in consumer electronics and fast-moving categories
• Mature contract-manufacturing infrastructure for global brands at very large volumes
• Higher domestic value addition in mobile-electronics today (40–45% vs ~19% in India)

5.4 The Practical Decision for Buyers in 2026

For most multinational buyers in 2026, the correct answer is rarely ‘India only’ or ‘China only.’ It is a deliberate hybrid: continued use of Chinese contract manufacturing for established, high-volume, supply-chain-deep categories; parallel India capacity for diversification, friend-shoring, regulatory hedging, and tariff exposure management. The mix should be designed sector-by-sector and revisited annually as the underlying competitive position evolves. The Apple iPhone playbook (continuing Chinese assembly while ramping India to 25% of global output) is, in many ways, the canonical illustration of how sophisticated buyers are running this trade-off.

6. India vs the Other ‘Plus-One’ Destinations

India is one of several destinations capturing diversified manufacturing. An honest comparison against the other principal plus-one geographies, Vietnam, Mexico, Thailand, Malaysia, and Indonesia, shows where each has structural strengths and where India has the better case. The comparison below uses publicly cited industry data and reporting.

6.1 Headline Comparators

6.2 Where Each Destination Has Its Edge

Vietnam- established electronics export base

Vietnam’s electronics exports of USD 165 billion in 2023 reflect a deep, mature electronics-manufacturing ecosystem built over the past decade and anchored by Samsung, Intel, and Foxconn. For high-volume, export-oriented electronics assembly with established global brand relationships, Vietnam remains highly competitive.

Mexico- nearshoring proximity to the US

Mexico’s structural advantage is geographic, proximity to the US market, USMCA trade-agreement access, and shorter inbound and outbound transit. For US-bound automotive, electronics, and consumer-products supply chains where lead-time and tariff-exposure management are decisive, Mexico is often the natural answer.

Thailand and Malaysia- EV, battery, semiconductor depth

Both Thailand and Malaysia are established locations for EV, battery, and semiconductor production. Thailand has long been a regional auto hub; Malaysia has built a mature semiconductor packaging and testing base. For the most technology-intensive sub-sectors of plus-one strategy, both are credible alternatives to India.

Indonesia- scale and ASEAN access

Indonesia is a beneficiary of the broader ASEAN FDI surge (USD 225 billion in 2024, per UNCTAD) and offers scale, a large domestic market, and rich critical-mineral resources particularly relevant for battery-supply chains.

6.3 Where India Has the Stronger Case

Across the verified data, India has the strongest case in five specific scenarios:

• Sectors where pre-existing manufacturing depth matters- pharmaceuticals, auto components, specialty chemicals, specialty steel
• Investments where domestic demand is part of the rationale- large addressable home market plus export-platform potential
• Categories with strong PLI architecture- mobile electronics, white goods, telecom, specialty steel, solar PV, ACC batteries
• Friend-shoring exposure that benefits from India’s alignment frameworks- semiconductors, defence-adjacent components, clean energy
• Engineering-and-talent-intensive activities- design-led manufacturing, software-integrated production, R&D-linked operations

6.4 The Honest View on Competitive Position

It is worth noting that India’s share of plus-one capture has, on some specific metrics, lagged Vietnam and Thailand. India’s manufacturing-imports growth from Western countries was ~6.3% CAGR (2014–2023), compared with ~12.4% for Vietnam and Thailand combined. This is a useful corrective to overly optimistic India narratives, India is gaining ground rapidly but is not the runaway winner of the plus-one race in every category. The realistic framing is that India is one of two or three serious destinations for most diversification decisions, with sector-specific advantages that often tip the choice in its favour.

7. Challenges of Manufacturing Setup in India- Where India Still Has Work to Do

A balanced assessment requires honesty about the constraints that any prospective India entrant should plan around. These are documented in policy literature, industry-association commentary, and ground-level operational experience, not aspirational caveats.

7.1 Domestic Value Addition Is Still Catching Up

The most honest single data point on India’s manufacturing maturity is domestic value addition (DVA). For Apple’s iPhones, DVA in India had reached ~19% by mid-2025 (Ministry of Electronics and IT data), substantial progress from the 5–8% level when the PLI scheme started, but still well below China’s mature 40–45% level achieved over nearly two decades. The Electronics Components Manufacturing Scheme (ECMS) is explicitly designed to push this number toward ~30% over the next four years. The implication for incoming manufacturers is that component-supplier ecosystems still need to be developed in parallel, and that this should be planned into the project, not assumed.

7.2 Trade Deficit With China Has Widened

Despite Make in India, PLI, and Press Note 3 controls, India’s trade deficit with China has widened significantly. The deficit grew from USD 99.2 billion in 2024-25 to USD 112.16 billion in 2025-26. The deficit is concentrated in electronics, machinery, organic chemicals, and intermediate materials, exactly the categories where domestic value addition remains thin. This is a structural challenge that underscores why component-level capacity building (not just final-assembly volume) is the next strategic priority for India.

7.3 Infrastructure, Logistics, and Ease of Doing Business

Logistics costs in India have historically been higher than in many ASEAN comparators. The National Infrastructure Pipeline aims to reduce logistics costs significantly, but the project pipeline is still being delivered. Power reliability, water availability, last-mile road and rail connectivity, and port turnaround times vary materially across states, making location selection within India a non-trivial exercise. Regulatory complexity (multiple central-state-municipal approvals, varying environmental clearance timelines, and labour-law applicability across the new four-code framework) is improving but still demands experienced local navigation.

7.4 Skills Gap at the Component-Engineering Level

India produces strong volumes of engineering and technical graduates, but the specific deep-skill bench in component engineering, advanced tooling, and high-precision manufacturing, the skills that underpin China’s mature ecosystem, is still being developed. For some categories, this means initial capacity build-out depends on imported tooling, expat technical staff, or technology-transfer arrangements with global partners. Over the last five years, the electronics industry has provided employment to over 1.33 million people, as stated by the India Cellular & Electronics Association. Approximately 70% of this addition in employment was that of women and new employees.

7.5 Single-Country Concentration Inside India

India’s investment geography is itself concentrated. Maharashtra accounted for 39% of FY 2024-25 FDI equity inflows, Karnataka 13%, and Delhi 12%. For a multinational considering India, this often translates into a small number of state-level industrial hubs (Pune, Sriperumbudur, Hosur, Ahmedabad, Sanand, Hyderabad, NCR) being the practical universe of credible locations, which can be a feature (cluster-based supplier ecosystems) or a constraint (competition for talent and infrastructure). State-level incentive packages also vary materially, requiring careful comparison alongside the central PLI / ECMS framework.

7.6 What This Means for Project Planning

None of these constraints is fatal, but each requires explicit project-level planning. The most successful India entrants tend to budget for higher initial CapEx than naive cost-arbitrage models suggest, plan for a multi-quarter ramp-up rather than instant scale, build component-supplier development into Year-1 plans (or commit to importing components for the early period), structure governance against state-level execution risk, and treat skill-building as a strategic line item rather than an HR function. Done well, these adjustments turn the headline constraints into manageable execution choices rather than surprises.

8. Latest Manufacturing Trends in India 2026

The eight trends below capture the most material shifts shaping India manufacturing in 2026. Each is anchored in publicly-verifiable Government of India and major industry-press sources.

Smartphone exports become India’s largest single export category

Mobile phones / smartphones became India’s top export in FY 2024-25, reaching USD 30.13 billion across all brands (industry-press / government data). Apple’s INR 2 trillion in iPhone exports alone in calendar 2025 represents a tipping-point in the structural composition of India’s exports.

ECMS launches as the structural successor to mobile PLI

The Electronics Components Manufacturing Scheme (ECMS) is designed to drive component-level value addition from ~19% toward ~30% over four years (industry / MeitY data). For incoming electronics manufacturers, ECMS, alongside the India Semiconductor Mission, is now the more strategically relevant policy framework than the legacy mobile PLI, which ends in March 2026.

Press Note 3 amendments- measured re-opening to Chinese FDI

In March 2026, India amended Press Note 3 to allow non-controlling beneficial ownership of up to 10% by investors from land-bordering countries via the automatic route, subject to safeguards. Cumulative Chinese FDI between April 2000 and December 2025 was ~USD 2.5 billion (~0.3% of total inflows), making China the 23rd-largest investor, the change is therefore more about specific capability gaps in electronics, EVs, and components than about wholesale liberalisation.

Auto and EV PLI disbursement set for 2026 inflection

Auto and auto-components PLI saw FY27 BE rise 184% to INR 5,940 crore (over FY26 RE of INR 2,091 crore), the strongest forward-looking signal in the FY27 budget. Tata Motors, Mahindra & Mahindra, Bajaj Auto, TVS Motor, and Ola Electric are among named beneficiaries (industry press).

White goods PLI sees FY27 BE more than triple

White goods (AC and LED) PLI saw FY27 BE rise to INR 1,003.54 crore, more than three times FY26 RE, indicating a meaningful disbursement cycle is now beginning for AC and LED manufacturers. The scheme targets a jump in DVA from 20–25% to 75–80% by 2028-29.

Friend-shoring frameworks deepen

The QUAD, India-EU TTC, India-Australia ECTA, India-UAE CEPA, and ongoing US trade-pact discussions continue to extend India’s alignment-driven access. The reduction of US tariffs on certain Indian export categories is an example of how trade-pact discussions are translating into concrete trade outcomes.

UNCTAD-confirmed greenfield investment momentum

UNCTAD World Investment Report 2025 (covering 2024 data) confirmed India’s greenfield project capex surged 22% to USD 114 billion during 2020-2024, with India among the locations of four-out-of-ten largest greenfield semiconductor announcements globally. This is the cleanest international validation of India’s rising structural importance in critical manufacturing sectors.

State-level capability stacking accelerates

Maharashtra (39% of FY25 FDI equity), Karnataka (13%), Delhi (12%), and the broader Tamil Nadu / Telangana / Gujarat / Uttar Pradesh quartet continue to compete actively for industrial investment with state-level capital subsidies, stamp-duty waivers, SGST reimbursements, and industrial-plot allocations. For prospective entrants, state-level incentive negotiation is now arguably as important as central PLI eligibility.

Conclusion

The numbers speak for themselves: India has become an undeniable player in global manufacturing, driven by foreign investment inflows of USD 81.04 billion in FY25, increased manufacturing investments, and PLI investments amounting to INR 2.16 lakh crore. Big-ticket projects such as Apple’s INR 2 trillion worth of iPhone export plans and the USD 110 billion capex investments highlighted by UNCTAD show that India is not merely a hypothetical player in international value chains anymore. If organizations have opted for a China +1 strategy, India has become a viable destination in industries such as pharmaceuticals, electronics, automobile components, specialty chemicals, and clean technology.

There is a caveat here, however. India is one among multiple countries, which includes Vietnam, Mexico, and other Southeast Asian nations, with their own strengths. Competitiveness varies by sector, with domestic value addition improving but lagging behind more developed environments such as China. Component shortages within domestic manufacturing also present structural issues.

As a result, the most effective strategy is not a wholesale shift but a calibrated, sector-by-sector capacity build. Anchoring investments in India’s core strengths, while complementing them with other geographies, allows firms to build resilient and diversified supply chains. Positioned this way, India becomes a long-term strategic capability within global manufacturing networks, rather than just a tactical alternative to China.