India Overtakes Global Manufacturing Trend With China+1 Boost

The Global Manufacturing Trend is shifting in India's favor as global companies continue to reduce their dependence on China and expand operations in other countries.

The latest study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) shows that India has emerged as one of the biggest beneficiaries of the China+1 Strategy. It recorded stronger factory growth after the pandemic than it did in the years before. This change has pushed India above the global manufacturing average and placed it alongside some of the world's leading industrial economies.

“The global manufacturing landscape is undergoing a gradual but important shift. Companies are no longer looking at efficiency alone; they are equally focused on resilience and diversification. India's improving manufacturing performance reflects the impact of sustained reforms and growing investor confidence”, said Nirmal K Minda, President, ASSOCHAM.

The report highlights that India's average manufacturing growth increased from 3.44 percent during 2016-2019 to 4.15 percent between 2022 and 2025. The improvement reflects stronger industrial activity, better infrastructure, and policy support that continue to attract multinational companies looking for reliable manufacturing destinations.

India Moves Ahead in the Manufacturing Race

According to the ASSOCHAM study, India has made one of the biggest improvements in manufacturing performance since the COVID-19 pandemic.

Before the pandemic, India's manufacturing growth remained below the world average. However, after 2022, the country moved nearly two percentage points above the global benchmark, showing a sharp turnaround.

Manufacturing Performance Comparison

The report noted that before COVID-19, only China, Mexico, and Russia consistently performed above the global average. India has now joined that group, along with major developed economies including the United States, Germany, France, Italy, and the United Kingdom.

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What Is Driving India's Factory Growth?

Several government initiatives and changing global supply chains have supported India's rise as a Global Manufacturing Hub.

The report credits policies and investments that have improved industrial competitiveness, including:

• Expansion of the PLI Scheme across key sectors.
• Faster infrastructure development under PM Gati Shakti.
• Better logistics and transport connectivity.
• Rising domestic demand across industries.
• Increased foreign investment as companies diversify their supply chains.
• Greater focus on electronics, automobiles, pharmaceuticals, and engineering goods.

These factors have encouraged international manufacturers to consider India as a long-term production base instead of depending heavily on China.

Challenges Remain Despite Strong Momentum

While the outlook remains positive, manufacturers continue to face a few challenges.

Capacity utilization has slipped slightly to around 72 percent, indicating that factories still have room to increase production. Businesses are also dealing with higher input costs and ongoing geopolitical uncertainties that could affect global trade.

Even so, manufacturers remain optimistic about future investments as demand continues to improve. India's strong economic performance has further strengthened confidence, with the economy recording 7.7 percent growth during FY2025-26 and 7.8 percent growth in the January-March quarter.

The ASSOCHAM report suggests that if policy reforms continue and infrastructure development remains on track, India is well placed to strengthen its position as one of the world's fastest-growing manufacturing economies.

Key Highlights

• India's manufacturing growth improved from 3.44 percent to 4.15 percent after the pandemic.
• The country moved from below the world average to nearly 2 percentage points above it.
• Global companies are shifting investments under the China+1 strategy.
• Government initiatives and infrastructure projects continue to attract manufacturers.
• India has joined leading manufacturing economies in outperforming the global average.
• Industry confidence remains positive despite cost pressures and geopolitical risks.