India’s China+1 Manufacturing Shift: Winners & Key Players

The global manufacturing ecosystem is undergoing one of its most decisive transformations in decades. As multinational corporations reconfigure supply chains to reduce overdependence on China, the “China+1” strategy has emerged as a structural response to geopolitical risk, rising costs, and operational concentration. Instead of a complete exit from China, companies are diversifying manufacturing to alternative hubs that can offer scale, stability and competitiveness. India, with its expanding industrial base, improving infrastructure, and targeted policy incentives, has firmly positioned itself as one of the primary beneficiaries of this transition.

However, the real impact of China+1 is not broad-based across all industries. The gains are concentrated in specific manufacturing sectors where India possesses a natural advantage in cost, talent availability, regulation or supply chain depth. Identifying these sectors and the companies operating within them provides insight into where India’s manufacturing story is genuinely unfolding.

Electronics Manufacturing: The Most Visible China+1 Winner

Electronics has become the face of India’s manufacturing resurgence. Global smartphone and consumer electronics brands are shifting assembly and component manufacturing to India as part of their China diversification plans. Apple’s increasing production through its Indian partners has been a clear signal of this transition. The Production Linked Incentive (PLI) scheme has accelerated domestic capacity creation across the electronics value chain, from handset assembly to PCB manufacturing and component integration. India is slowly moving up the value curve from pure assembly to integrated manufacturing ecosystems.

Key Indian companies operating in this space include Dixon Technologies, Amber Enterprises, Kaynes Technology and Tata Electronics. These players are benefiting from rising localisation levels, expanding exports and long-term contract manufacturing relationships with global brands. Beyond mobile phones, the opportunity is widening into wearables, IoT devices and renewable electronics components.

Pharmaceuticals & APIs: A Strategic Supply Chain Realignment

India has long been a global supplier of generic medicines, but it was heavily dependent on China for Active Pharmaceutical Ingredients (APIs) and intermediates. The pandemic exposed this vulnerability, prompting global pharma firms to diversify sourcing and invest in alternative supply chains. The China+1 strategy has revived Indian investment in API manufacturing, backward integration and complex formulation capability. Government support for bulk drug parks and API clusters is creating long-term capacity expansion.

Companies such as Divi’s Laboratories, Laurus Labs, Aurobindo Pharma, Dr Reddy’s Laboratories and Neuland Laboratories are capitalising on this shift. These firms are strengthening their export presence while scaling manufacturing in high-margin specialised molecules. The strategic importance of India as a reliable pharmaceutical partner has positioned the sector for sustained growth rather than cyclical recovery.

Specialty Chemicals: Structural Rerouting from China

Environmental regulations, cost pressures and tightening compliance in China have led to supply disruptions in numerous chemical segments. This has opened substantial export opportunities for Indian chemical manufacturers. India’s specialty chemicals industry is benefiting from global demand in agrochemicals, dyes, polymers, intermediates and performance chemicals. This is not a temporary gain; supply chain realignment in chemicals tends to be sticky due to high switching costs and process integration.

Key companies widening their export footprint include SRF, Aarti Industries, Deepak Nitrite, Navin Fluorine and Pidilite Industries. These firms are expanding capacity, building long-term contracts and investing in R&D, making them material beneficiaries of the China+1 chemical shift. The sector’s appeal lies in its combination of high entry barriers and durable global demand.

Auto Components & EV Manufacturing: Expanding Global Role

India’s auto ancillary sector is emerging as a crucial manufacturing base for global vehicle makers. With China losing its singular dominance in auto component manufacturing, India has become an alternative hub for sourcing transmission systems, castings, precision parts and wiring harnesses. The electric vehicle (EV) transition further strengthens this opportunity as global OEMs seek localisation in battery packs, power electronics and drive systems. This shift aligns with India’s domestic EV policy and export-led manufacturing goals.

Companies such as Motherson Sumi Systems, Tata AutoComp Systems, Sundaram Clayton, Exide Industries and Amara Raja Energy are central to this evolution. They are not only catering to domestic demand but also integrating into global automotive supply chains. India’s role is steadily evolving from a component supplier to a system-level manufacturing partner.

Textiles and Apparel: Reclaiming Export Relevance

China’s rising labour costs and regulatory changes have weakened its stronghold over global textile exports. India, particularly in home textiles, garments and technical fabrics, is witnessing renewed export demand. Government-backed textile parks, export incentives and capacity modernisation are improving competitiveness. Buyers are increasingly shifting orders to India to mitigate supply risk diversification. Leading companies gaining from this resurgence include Arvind Ltd, Welspun India, Trident Group, KPR Mill and Vardhman Textiles. These companies are embracing automation, design innovation and sustainable practices to align with global sourcing requirements. While margins remain cyclically sensitive, the structural export shift remains firmly in India’s favour.

Defence Manufacturing: Strategic India Emergence

National security concerns and global supply chain localisation have triggered strong government-led defence manufacturing initiatives. India is significantly reducing dependency on imports and encouraging private sector participation in high-tech defence production. Private defence manufacturers are now building advanced subsystems, electronics and weapon components once sourced entirely from global OEMs. The sector benefits from long-term government contracts and strong policy backing. Companies positioned within this space include Bharat Electronics, Astra Microwave, Data Patterns, Bharat Forge Defence and Larsen & Toubro Defence. Defence manufacturing is becoming an essential pillar of India’s industrial policy and an indirect beneficiary of the China+1 framework.

Renewable Energy: A Core Winner in India’s China+1 Manufacturing Shift

Renewable energy has quietly become one of the most powerful beneficiaries of the China+1 strategy. As global companies look to reduce dependence on China for solar modules, batteries and green technology components, India is emerging as an alternative manufacturing hub for the clean energy supply chain. Backed by strong policy support, PLI incentives and ambitious national renewable targets, India is rapidly building capacity across solar module manufacturing, energy storage and green hydrogen.

Companies such as Adani Green Energy, ReNew Energy Global, Tata Power Renewable, Waaree Energies and Vikram Solar are expanding production lines and large-scale project execution to serve both domestic and international demand. Simultaneously, firms like JSW Energy and Power Grid Corporation are strengthening the transmission and green infrastructure backbone required for this transition. With global decarbonisation goals accelerating, renewable manufacturing in India is no longer just a sustainability story; it is becoming a vital pillar of industrial growth and a key component of the China+1 realignment.

Why India Is Emerging as a Manufacturing Powerhouse

Three key forces are shaping India’s rise:

Policy alignment through PLI schemes encourages both domestic and foreign investment

Improved infrastructure and logistics through major capex spending

Large, cost-competitive workforce with improved skill capabilities

Unlike many emerging alternatives, India offers both manufacturing scale and a vast domestic consumption base. This dual advantage strengthens its positioning as a long-term industrial anchor rather than a temporary substitute.

Investor Outlook: Where Capital Should Focus

From an investment standpoint, the China+1 strategy is a structural theme that plays out over decades. Instead of focusing purely on short-term volume growth, investors should track companies with strong balance sheets, scalable assets, multi-year order pipelines and rising export ratios. Sectors like electronics manufacturing, specialty chemicals, auto components and pharmaceuticals offer compounding visibility where India’s competitive advantage is becoming embedded into global supply chains.

The Bigger Picture

India’s manufacturing shift under China+1 is not merely an export story; it is the foundation of long-term economic transformation. The sectors benefitting today are those building ecosystem depth, technological capability and global reliability. The companies that scale efficiently and innovate consistently will define India’s production leadership for the next decade. While the strategy continues to evolve, one trend is undeniable: global manufacturing is no longer singularly anchored in one geography. And among the new beneficiaries, India’s role is steadily transitioning from alternative supplier to strategic global manufacturing partner.

Disclaimer: The article is for informational purposes only and not investment advice.