Over the past few years, global supply chains have undergone one of the most significant restructurings in modern economic history. The pandemic, geopolitical tensions and escalating trade conflicts exposed the risks of excessive concentration in several regions. For decades, China was widely regarded as the “world’s factory.” But disruptions forced global corporations to reassess that model and prioritise resilience alongside efficiency.
In that reassessment, India has moved from the periphery to the centre of global manufacturing conversations.
What began as a diversification strategy under the “China-plus-one” framework has now evolved into something far more structural. Multinationals are no longer merely looking at India as a fallback or a second option, but as a destination for manufacturing in the long term, with very attractive cost economics, a huge talent pool, and a massive domestic market. India is now trying to position itself as a destination of choice for companies looking for stability, scale, and supply chain optimization.
At the same time, global buyers are no longer evaluating Indian suppliers merely on cost competitiveness, but increasingly on traceability, regulatory compliance, ESG metrics, and digital integration. This shift is accelerating process maturity and operational sophistication across the manufacturing sector, pushing Indian companies to align with global quality, governance, and transparency benchmarks.
For global OEMs, the shift means that vendor diversification and localization strategies are now being driven from India, rather than being based on short-term procurement agreements. The question is no longer whether India can participate in global supply chains, it is whether it is emerging as a primary manufacturing destination.
Multiple structural factors suggest that this transition is well underway.
India continues to stand out as one of the fastest-growing large economies globally, maintaining GDP growth of around 6-7% even amid uncertain global conditions. Government-led policy measures have played a strong role in supporting this trajectory. The Production-Linked Incentive (PLI) schemes, with an overall outlay of nearly ₹2 lakh crore across sectors such as electronics, pharmaceuticals, automobiles and specialty steel, have encouraged significant investments and boosted manufacturing capacity.
India has consistently attracted over $60 billion in annual FDI inflows in recent years, reflecting sustained global investor confidence. These investments are not merely financial they are contributing to the development of domestic supplier ecosystems and stronger backward integration.
Notably, the PLI scheme has motivated global original equipment manufacturers (OEMs) to localize their component sourcing and develop an integrated supply chain ecosystem in India, thereby accelerating the development of tier-1 and tier-2 supplier ecosystems.
India’s export performance further reinforces this transformation. The country’s merchandise exports have crossed $450 billion in FY23, while total exports of goods and services have approached the $750 billion mark in recent years. Electronics exports have shown remarkable growth, with mobile phone exports having surged to over $15 billion annually, positioning India among the fastest-growing smartphone export hubs globally. This signals a transition from low-value assembly to higher value-added manufacturing.
The fact that India is becoming a destination for original equipment manufacturers (OEMs) for global brands is a testament to the growing confidence in the quality and regulatory standards of the country.
The expansion of infrastructure has further strengthened India’s manufacturing competitiveness. The Union government’s capital expenditure has risen sharply, crossing ₹10 lakh crore annually in recent budgets. Investments in freight corridors, port development, industrial corridors and multimodal logistics parks are shrinking distances and improving connectivity. The integration of markets through GST and the digitisation of regulatory systems have further enhanced ease of doing business.
Demographics are one of the most significant competitive strengths of India. With a median age of approximately 28 years, the country has one of the youngest workforces in the world. The country churns out a massive number of engineers and technical talent every year, which helps to integrate automation, data analytics, and advanced manufacturing practices. With the global value chain being increasingly technology-driven, the engineering skills and cost advantages offered by India make for a very attractive combination.
Another area that has developed is the development of local supply chains. While in the past the absence of focus on local sourcing meant that the country sourced most of its components from abroad, there is now a greater focus on backward integration, vendor development, and local sourcing. In areas such as electronics, autos, and consumer goods, the supporting industries are growing, and this is a key area that needs to be developed for any country that wants to be a true manufacturing destination.
Sustainability is emerging as a new differentiator. As global buyers begin to focus more on ESG compliance and lower carbon footprints, Indian manufacturers are focusing on the adoption of renewable energy, water conservation, and waste management systems. With India being one of the fastest-growing renewable energy markets in the world, the availability of green energy is becoming a new differentiator for export-oriented units.
For global OEMs, sustainability alignment is becoming a pre-requisite for supplier engagement, and this will further cement India’s position in the global value chain.
It is important to note that the rebalancing of global supply chains is not just about cost arbitrage. It is about stability, diversification, and strategic alignment. Political stability, the size of the consumption market, and the reform agenda have further improved India’s credibility in global boardrooms.
To be clear, India’s transition is still a work in progress. Continued reforms in logistics efficiency, ease of doing business, skill development and contract enforcement will be critical. But the inflection point is visible.
In 2026, India is more than just an insurance policy against supply chain disruption. It is steadily evolving into a manufacturing anchor in global value chains, defined not merely by diversification, but by scale, capability, competitiveness, and growing global trust.
By Nikhil Nanda, Founder & MD, JHS Svendgaard Laboratories Ltd
