India’s China+1 strategy has emerged as a key driver in the restructuring of global supply chains, driven by geopolitical tensions, US–China trade conflicts, and disruptions such as the COVID-19 pandemic. Companies worldwide are gradually reducing their dependence on China and diversifying towards countries like India.

India’s advantages include a large skilled workforce, cost-effective manufacturing, a strong base of English-speaking talent, and supportive government policies such as Production-Linked Incentive (PLI) schemes.

This shift is benefiting sectors such as electronics, pharmaceuticals, auto components, textiles, and specialty chemicals, as multinational companies like Apple, Samsung, and Foxconn expand their presence in India.

As of April 2026, India’s electronics exports have grown by ~35% YoY, capturing nearly 8% of the global EMS market. In pharmaceuticals, India now accounts for a rising share of API supplies used in global generics.

Core Drivers of the China+1 Opportunity

The China+1 shift has accelerated since 2020 due to US tariffs and China’s strict lockdown policies. India’s demographic advantage (median age ~28 vs ~39 in China), improving IP protection, and trade agreements with countries like the UAE and Australia further strengthen its position.

The PLI scheme has allocated nearly Rs 2 lakh crore across sectors, supporting large-scale manufacturing investments and job creation. Mobile manufacturing output has risen sharply, from ~$11 billion in FY21 to ~$25 billion in FY25.

Additionally, reforms such as higher FDI limits, single-window clearances, and infrastructure initiatives like Gati Shakti have improved the ease of doing business.

However, challenges remain, skill gaps in advanced manufacturing (especially semiconductors), logistics inefficiencies, and competition from Chinese exports. Despite this, manufacturing’s share in India’s GDP is expected to rise steadily.

Electronics and EMS Leaders

The electronics manufacturing services (EMS) segment is among the biggest beneficiaries of China+1.

Companies like Dixon Technologies have seen strong growth driven by orders from global brands shifting production to India. Amber Enterprises has expanded its presence in air-conditioner manufacturing and exports.

Syrma SGS Technology is benefiting from demand in precision components used in EVs and electronics. Meanwhile, Kaynes Technology and PG Electroplast are gaining from rising EMS demand and capacity expansion.

While many of these stocks trade at premium valuations (higher P/E multiples), strong return ratios and visibility of growth support investor interest.

Pharmaceuticals and APIs

India’s pharmaceutical industry (~$50 billion) is projected to grow significantly by 2030, with APIs emerging as a major China+1 opportunity.

China currently dominates global API supply, but increased regulatory scrutiny and supply chain diversification are creating opportunities for Indian players.

Companies like Aurobindo Pharma are expanding API manufacturing capacity and strengthening global supply linkages. Similarly, Sun Pharma and Dr. Reddy’s are focusing on complex generics and biosimilars, while Lupin is investing in fermentation-based manufacturing.

These companies benefit from export demand, but performance remains linked to regulatory approvals and pricing dynamics.

Auto Ancillaries and EVs

India’s auto component exports have grown steadily, supported by global OEM diversification and EV adoption trends.

Companies like Tata Elxsi (design and engineering), Minda Corporation (components), Bharat Forge (forging), and Endurance Technologies (auto components) are positioned to benefit from global supply chain shifts.

Government support through PLI schemes for auto and battery manufacturing is further strengthening the ecosystem.

Textiles and Specialty Chemicals

Textiles are gaining from supply chain shifts away from China and Bangladesh, supported by initiatives such as PM MITRA parks.

Companies like Arvind Ltd and KPR Mill are expanding exports to global retailers.

In chemicals, firms such as Navin Fluorine, PI Industries, and Deepak Nitrite are benefiting from global diversification of supply chains. These companies operate in niche segments and often have strong export linkages.

However, these sectors can be cyclical and are influenced by global demand and pricing trends.

Investment Strategy

A balanced approach may work best in capturing China+1 opportunities.

Investors can consider a mix of high-growth segments (such as electronics manufacturing) and relatively stable sectors (such as pharmaceuticals). Diversification across sectors, electronics, pharma, auto, and chemicals, can help manage risks.

Tracking earnings growth, order book visibility, and execution capability remains critical, rather than relying solely on thematic momentum.

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