Why India hasn’t won the “China Plus One” race — and who has
21 Dec 20257 min read
Summary
- While India has positioned itself as an alternative manufacturing base, Southeast Asian countries such as Vietnam, Malaysia, Thailand, and Indonesia have attracted the bulk of supply chain diversification capital due to proximity to China, faster execution, and more predictable regulatory frameworks.
- India has made gains in electronics assembly, auto components, and policy incentives through initiatives like the PLI schemes, but slow disbursement, fragmented regulations across states, and trade headwinds continue to limit its ability to scale manufacturing quickly and consistently.
- Centralised trade systems, single-window approvals, and integrated logistics infrastructure have allowed Southeast Asia to deepen its role in global supply chains. Without coordinated policy execution and stronger value-chain integration, India risks remaining a partial beneficiary rather than the primary China Plus One destination.
For two decades, China has served as a central hub of global manufacturing. However, rising costs, regulatory changes, and geopolitical tensions have pushed firms to diversify their supply chains.This shift has been coined the “China Plus One” approach—maintaining a base in China while entering other markets. The approach has become a standard feature of supply chain strategy, but the question is where the redirected investment has gone. While India has sought to position itself as the leading alternative, it has not yet secured the majority of this momentum. Instead, Southeast Asia (SEA) has attracted most of the capital, supported by geographic proximity to China and streamlined business environments.
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