For two decades, "manufactured in China" was close to a default setting for global buyers. That default is being actively rewritten. China-plus-one, the strategy of keeping a footprint in China while deliberately building capacity in at least one other country, has moved from a contingency plan some companies discussed to what many now treat as an operational requirement. For Indian exporters, that shift is opening a genuine window, but it's one that rewards speed and preparation more than it rewards simply waiting for orders to arrive.
Why this is happening now
A few forces are pushing this shift simultaneously rather than any single cause. US tariffs on Chinese goods now reach over 100% on some strategic categories, a swing that can be existential for businesses operating on thin margins. Alongside tariffs, manufacturing wages in China have roughly tripled since 2010, eroding the cost advantage that originally drove offshoring there in the first place. Add to that ongoing geopolitical uncertainty and the lingering memory of pandemic-era supply shocks, and diversification has stopped being optional for many global buyers.
India's actual position in this shift
India is a genuine beneficiary of this trend, but not the only one, and not automatically the biggest. India recorded provisional FDI inflows of USD 81.04 billion in FY 2024-25, a 14% rise over the prior year, with manufacturing FDI alone growing 18% year-on-year to USD 19.04 billion. Electronics has been the standout: Apple's iPhone exports from India crossed roughly USD 23 billion in calendar 2025, an 85% jump from 2024.
But the picture is genuinely competitive, not a foregone conclusion in India's favour. ASEAN nations attracted a record USD 225 billion in FDI in 2024, Vietnam's electronics exports reached USD 165 billion in 2023, and Mexico continues to absorb significant nearshoring investment tied to its proximity to the US market. For most global buyers, the real question isn't whether India is winning the diversification race outright, it's which specific sectors and product categories make sense to build in India versus elsewhere.
Where Indian exporters are best positioned
A few sectors stand out clearly in the current data:
- Electronics, led by smartphone assembly, now one of India's fastest-growing export categories.
- Pharmaceuticals, where India's industry, valued at roughly ₹3.5 lakh crore, supplies close to 70% of the WHO's vaccine needs at meaningfully lower manufacturing costs than Western producers.
- Specialty chemicals and pharma intermediates, with established export capacity concentrated in clusters like Gujarat.
- Auto components, as manufacturers diversify sourcing networks in search of cost-competitive, non-China production bases.
- Specialty steel, backed by significant government-linked investment commitments.
Where the opportunity meets real friction
The gap between opportunity and execution is where many exporters underestimate the work involved. India's regulatory environment, certification requirements like BIS quality control orders, and infrastructure gaps around power and logistics remain genuine friction points for global buyers evaluating India against competitors. India also lacks the tariff advantage some competing destinations enjoy in key markets, since a comprehensive trade agreement with the EU remains under negotiation while other diversification destinations have already secured preferential access. None of this rules India out. It does mean the opportunity isn't passive, buyers moving away from China are actively comparing destinations, and execution quality often decides where volume actually lands.
What this means practically for Indian exporters
For an MSME exporter, China-plus-one translates into something concrete: a real chance at new buyer relationships that didn't exist a few years ago, often from companies actively looking to reduce single-country exposure rather than chase the lowest possible cost. But capturing that opportunity usually means scaling faster than a business's existing cash flow comfortably allows, new capacity, new certifications, larger raw material procurement, and often a first-time buyer relationship without years of prior transaction history to lean on.
This is precisely the gap that trips up otherwise well-positioned exporters. A buyer moving part of their sourcing away from China isn't going to wait months for a supplier to secure working capital through a traditional, collateral-heavy lending process. The businesses that actually capture this window tend to be the ones who can fund a new order quickly once it's confirmed, not the ones with the strongest five-year financial history.
How CapitalXB fits into this moment
As an RBI-licensed NBFC-Factor, CapitalXB evaluates financing against the strength of the transaction, a confirmed export order, an invoice, a new buyer relationship, rather than requiring years of financial history or fixed collateral. For MSME exporters trying to move quickly on a genuine China-plus-one opportunity, that structure matters as much as the opportunity itself: a good order that can't be funded in time is an opportunity someone else captures instead.
The bottom line
China-plus-one is a real and durable shift, not a passing trend, and India is genuinely positioned to benefit from it in electronics, pharma, chemicals, auto components, and steel. But the exporters who actually capture this moment will be the ones who can move at the speed the opportunity demands, backed by financing that matches a new order the day it's confirmed, not months later.