New Delhi, Oct 16 (IANS) India could capture a significantly larger slice of global manufacturing as companies diversify supply chains beyond China, with momentum further driven by production‑linked incentive schemes and rising exports, a report said on Friday.
With China accounting for approximately 29 per cent of global manufacturing and India around 3 per cent, the report from smallcase said that even a modest increase in India’s share could translate into a significant expansion of domestic manufacturing activity.
The China+1 strategy of many countries that adds manufacturing capacity outside China creates opportunities in India across specialty chemicals, pharmaceuticals, auto components and electronics.
Nitya Shah, smallcase manager & Co- Founder KamayaKya Wealth Management said that India’s China+1 opportunity, the convergence of European capacity closures, supply-chain diversification and India’s expanding manufacturing capabilities, could create a substantial opportunity for Indian businesses over the coming decade.
“However, translating this potential into sustained growth will depend on improving infrastructure, reducing input costs and ensuring faster execution of industrial policies,” Shah said.
Underlining the scale of opportunity, the report said that Europe announced 37 million tonnes of chemical capacity closures between 2022 and 2025, while Germany recorded 24,064 corporate insolvencies in 2025, its highest annual tally in 11 years.
As Europe’s industrial base faces mounting cost pressures and global companies seek to diversify supply chains beyond China, India is emerging as a significant contender in the global manufacturing landscape.
Europe’s industrial slowdown could open doors for Indian manufacturers
Europe’s manufacturing challenges are being driven by elevated energy costs, labour expenses and pressure on industrial competitiveness. Germany’s industrial electricity prices and labour costs remain significantly higher than those in competing manufacturing destinations, while chemical production and plant utilisation have weakened.
India’s iPhone exports reached approximately Rs 2 lakh crore in FY26, and gross foreign direct investment (FDI) rose 17 per cent to $94.5 billion, signalling growing manufacturing momentum.
India’s large domestic market, engineering and chemistry talent pool, and established industrial base in pharmaceuticals, chemicals, forgings, castings and auto components provide capabilities that can support more complex manufacturing and component sourcing.
Manufacturing currently accounts for approximately 13 per cent of India’s GDP, with the National Manufacturing Mission targeting a 25 per cent share by 2035. India recorded merchandise exports of $441.8 billion in FY26, including $122.4 billion in engineering goods and $48 billion in electronics.
—IANS
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