The US-China trade war has evolved from a tense standoff into a turbulent, unpredictable game of economic brinkmanship. At the heart of this confrontation is a complex mix of tariffs, exemptions, and last-minute reversals under President Donald Trump’s administration. But amid this volatility, India could quietly be positioning itself for its moment in the manufacturing sun.
With global supply chains yearning for stability and diversification, India stands at the cusp of its most significant economic transformation since its 1991 liberalisation. As manufacturers increasingly look to hedge against the risks of operating in or relying on China, India is being viewed as a viable — and perhaps vital — alternative. The shift is not only strategic but structural, and it may redefine the global manufacturing map in the coming decade.
Tariff Whiplash and Trump’s Unpredictability
Donald Trump’s return to the headlines has reignited concerns among global business leaders. In true Trumpian style, sweeping tariffs of up to 145% were announced on Chinese goods — only for smartphones, semiconductors, solar cells, and laptops to be exempted days later. It’s a whiplash-inducing policy dance that underlines just how unpredictable the US-China trade equation remains.
While these exemptions temporarily spare some tech products from tariffs, the damage has been done. Manufacturers view the US-China relationship as one to be wary of, and the uncertainty created by these sudden reversals is pushing manufacturers to look elsewhere — and India stands ready.
India’s Edge Amid the Chaos
India retains a powerful advantage in this reshuffling of global priorities. Despite the US softening its stance temporarily, industry analysts are optimistic that India can grow its footprint in consumer electronics exports — particularly to the United States. India already accounts for roughly 14% of global iPhone production. That figure is expected to double within the next year as Apple and others ramp up their India operations.
With brands like Motorola and Apple expanding their Indian assembly lines, companies like Dixon Technologies are capitalising on their “China-plus-one” strategy. Dixon alone could soon be meeting most of Motorola’s global demand directly from its Indian factories — a sign of what’s to come as the tectonic plates of global trade shift.
The Long-Term Game: Manufacturing Sovereignty
More than just short-term cost advantages, these moves align perfectly with India’s ambition to become a manufacturing superpower in its own right. The Indian government’s push through Production Linked Incentive (PLI) schemes, a new component manufacturing policy, and favourable tariff regimes puts it in a prime position to attract long-term investments.
While the US exemptions blunt some of the immediate tariff-driven advantages, the broader distrust in China’s role in global supply chains persists. The world is not just looking for a cheaper alternative to China — it’s looking for a trusted one, free from the seesaw nature of the tariffs being imposed. India is rising to meet that demand.
Strategic Bilateralism and Trade Diplomacy
India’s ascent will also be dictated by its diplomatic deftness. With Trump’s mercurial policymaking hanging over global trade, Indian policymakers must double down on securing a bilateral trade agreement with the US. Such a deal would codify India’s growing relevance in Washington’s economic calculus, insulating it from the whims of any one administration.
Moreover, this is India’s opportunity to pitch itself as a partner that doesn’t just provide cheaper labour, but also strategic alignment in a world increasingly shaped by geoeconomics and security alliances. The Quad, strategic dialogues, and common concern over China’s growing assertiveness are all tailwinds in India’s favour.
A “Second 1991 Moment” for India
Commentators have dubbed this India’s “second 1991 moment” — a potential inflection point that could remake its economic destiny. If the early ‘90s were about liberalisation and reform, this era is about global integration and resilience. This time, however, India isn’t reacting to a crisis — it’s proactively leveraging a once-in-a-generation opportunity.
The numbers are telling. Chinese electronics exports to the US have plummeted from 46% in 2018 to just 24% in 2023. Simultaneously, the US has emerged as India’s largest electronics export market, absorbing nearly one-third of its total output. That’s not a coincidence. It’s a trend.
What happens next will depend on how decisively India moves to seize this moment — by investing in infrastructure, improving ease of doing business, nurturing innovation ecosystems, and developing a skilled labour force at scale.
India as the New Pillar of Global Supply Chains
As Trump’s policy zigzags continue to sow confusion, global manufacturers are faced with a choice: cling to an increasingly volatile status quo in China, or build for the future with a more stable, democratic, and increasingly tech-savvy India.
Yes, the exemptions on consumer electronics might seem like a reprieve for China in the short term, but the longer arc of manufacturing is bending towards diversification. And India, with its growing manufacturing base, strategic alignment with the West, and reformist zeal, is perfectly placed to catch the wind.
The world may have once looked at India as the back office of the global economy. Now, it could well become the factory floor of a new wave of manufacturing.
