China+1: Why Global Companies Are Moving Factories to India
China+1: Why Global Companies Are Moving Factories to India
For decades, "Made in China" dominated global trade. Nearly every electronic product, garment, toy, and industrial component passed through a Chinese factory at some point. But between 2020 and 2026, something significant changed. Global companies began actively building a Plan B — a second manufacturing country outside China. This strategy is called China+1, and India has emerged as its primary beneficiary.
Why Did Companies Start Looking Beyond China?
Three forces drove the shift:
Rising costs. Wages in China have risen dramatically over 15 years. The competitive cost advantage that made China the world's factory has narrowed significantly. Companies that moved to China to cut costs now find the advantage shrinking.
COVID-19 supply chain shock. When Chinese factories shut during lockdowns in 2020-22, global supply chains seized up. Chip shortages paralysed car manufacturing. Medical equipment ran out. Companies realised that concentrating all production in one country was a systemic vulnerability — not just a cost decision.
US-China geopolitical tensions. US tariffs on Chinese goods and export controls on semiconductors made global companies nervous about their China exposure. The question became: what happens to our supply chain if this relationship deteriorates further?
Why India Specifically?
- Scale of the domestic market. 1.45 billion people. Companies that manufacture in India can serve the Indian market locally while exporting globally — the same combination China once monopolised.
- Production Linked Incentive (PLI) schemes. The Indian government launched PLI schemes across 14 sectors with a Rs 1.97 lakh crore outlay. These pay cash incentives tied to incremental production above threshold levels, essentially subsidising the transition cost.
- English-speaking workforce. India's engineering and technology talent pool communicates in English, reducing coordination friction for Western and Japanese multinationals.
- Infrastructure investment. India spent approximately $1.4 trillion on highways, ports, railways, and airports between 2020 and 2025, dramatically improving logistics.
Who Has Actually Moved?
| Company | What They're Doing in India |
|---|---|
| Apple (via Foxconn and Tata) | Assembling iPhones in Tamil Nadu and Karnataka; targeting 32% of global iPhone output in India by 2026-27 |
| Samsung | Expanded phone manufacturing in Noida — one of the world's largest phone factories |
| Micron (semiconductors) | Building semiconductor assembly and testing facility in Gujarat under the India Semiconductor Mission |
| Toyota, Suzuki, Hyundai | Major car manufacturing bases in Karnataka, Gujarat, Tamil Nadu |
| Walmart, Target | Increased apparel and home goods sourcing from Indian manufacturers |
What Are the Honest Limitations?
Apple's Indian factories currently have iPhone yield rates of roughly 50%, far below China's mature production lines. Component ecosystems — the networks of suppliers producing specific parts — are far less developed in India than in China's tightly integrated industrial clusters. Many "Made in India" iPhones still contain components manufactured in China. India is supplementing China in global supply chains, not replacing it.
Made in India is no longer just a slogan. It is becoming a supply chain reality — with real limitations and real momentum at the same time.
Comments