Is the China+1 strategy giving India its biggest export opportunity yet?

India is emerging as one of the biggest potential beneficiaries of the global "China+1" strategy, with multinational companies increasingly looking to diversify manufacturing and supply chains beyond China. According to a report by YES Securities, this shift presents a rare opportunity for India to strengthen its position in global value chains and accelerate export-led growth.

The report notes that geopolitical tensions, supply-chain disruptions and concerns over excessive dependence on a single manufacturing hub have prompted global corporations to seek alternative destinations. Rising wages in China and increasing geopolitical uncertainty have further accelerated the trend, creating opportunities for countries capable of absorbing large-scale manufacturing investments.

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India, with its large labour force, expanding domestic market and improving manufacturing ecosystem, is increasingly positioning itself as one of the few economies capable of benefiting from this global realignment. According to YES Securities, the country is at an important economic inflection point, with recent gains in electronics, engineering goods, pharmaceuticals and auto components highlighting its growing manufacturing capabilities.

The report says India's recent free trade agreements (FTAs) with the UAE, Australia, the UK and the European Free Trade Association (EFTA), along with negotiations with the European Union and the US, are strengthening the country's attractiveness as a manufacturing destination. These agreements provide exporters with greater tariff certainty and improved access to major markets.

Unlike previous trade agreements, the current FTA cycle is being implemented alongside a strong domestic manufacturing push through Production-Linked Incentive (PLI) schemes, industrial corridors, ports, logistics infrastructure and supply-chain localization initiatives. This combination, according to YES Securities, could create the foundation for a long-term manufacturing and export growth cycle.

Among various sectors, electronics has emerged as the strongest beneficiary of India's changing trade architecture. The report highlights that smartphone manufacturing ecosystems led by Apple and its supplier network have transformed the sector from being largely import-dependent into one of the country's fastest-growing export industries.

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Pharmaceuticals and engineering goods are also expected to gain from increasing integration into global supply chains and improved market access. Auto ancillary companies could benefit as multinational firms diversify sourcing networks and seek cost-competitive production bases.

The report points out that global trade is increasingly being shaped by regional and bilateral agreements rather than broad WTO-led liberalization. Countries such as Vietnam and Mexico have already benefited significantly from preferential trade arrangements, and without similar agreements, Indian exporters risked facing tariff disadvantages in key markets.

However, YES Securities cautions that market access alone will not guarantee success. India's merchandise exports have grown at a relatively modest pace over the last decade, indicating that competitiveness remains a bigger challenge than tariffs. High logistics costs, infrastructure gaps, compliance complexity, expensive power and lower labour productivity continue to weigh on manufacturing efficiency.

According to the report, the ultimate success of the China+1 opportunity will depend on India's ability to improve domestic competitiveness and deepen its participation in global value chains. If supported by continued reforms and infrastructure investments, the ongoing supply-chain diversification could provide India with a once-in-a-generation opportunity to emerge as a major global manufacturing hub.