The article first appeared in NY Times on Apr 15, 2025.
As global supply chains shift under the weight of geopolitical tensions, India finds itself at a pivotal crossroads. With the U.S. considering a fresh wave of tariffs on Chinese goods, including a steep 60% levy under Donald Trump’s proposed trade strategy, businesses around the world are urgently seeking alternatives to Chinese manufacturing. For India, this could be the long-awaited moment to establish itself as a credible global manufacturing hub.
The opportunity is real and growing. Major economies are reconsidering their dependence on China, especially in electronics, textiles, and machinery. India, with its vast labor force and favorable demographics, seems like a natural successor. Yet, the journey from potential to performance is riddled with challenges.
On the ground, manufacturers in India face a chronic shortage of skilled labor, which hampers productivity and quality. Despite millions entering the workforce each year, vocational training and practical experience remain limited. Beyond human resources, manufacturers struggle to secure key components due to underdeveloped supply networks and weak logistics infrastructure. Even when goods are produced, they often face delays at ports, customs, and checkpoints—reflecting the persistent bureaucratic inefficiencies India is known for.
The government has rolled out initiatives like “Make in India” and production-linked incentives (PLIs) to attract foreign investment. While these policies are helping, systemic issues—like inconsistent state-level regulations, unpredictable policy shifts, and unreliable electricity—continue to deter investors who might otherwise consider India a serious alternative to China or Vietnam.
Multinational companies are cautiously optimistic. Some are expanding operations in India or building secondary supply bases. However, few are willing to make a full-scale pivot away from China just yet. For India to truly capitalize on this global transition, it must go beyond headline reforms and focus on executing reliable, on-the-ground improvements—particularly in training, logistics, and governance.
In essence, India stands at the threshold of transformation. The opportunity to become the world’s next manufacturing powerhouse has never been greater, but whether the country can overcome its structural bottlenecks remains uncertain. The world is watching, and the decisions India makes now could define its economic trajectory for decades….
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