The global manufacturing sector is experiencing a significant transformation, with India emerging as a pivotal force in this shift. Driven by a combination of geopolitical factors, shifting trade policies, rising costs in China, and increasing global tariff barriers, manufacturers are actively seeking alternative production hubs. As a result, India is emerging as a preferred destination for global companies looking to diversify their supply chains and reduce dependence on China.
This transition is not just a short-term response to tariffs—it reflects long-term strategic changes in how businesses view sourcing, labor, infrastructure, and political risk. With government initiatives like “Make in India,” robust investment incentives, and a young, skilled workforce, India is positioning itself as a global manufacturing powerhouse.
In this blog, we explore how India is replacing China as a key manufacturing destination, the role tariffs play in this transition, the comparative advantages of Indian manufacturing, and what this shift means for businesses worldwide. We’ll also examine how companies like HanaV are helping global manufacturers navigate this evolving landscape.
The Tariff Landscape: What Changed?
Ongoing trade conflicts between the U.S. and China, compounded by widespread global disruptions such as the COVID-19 outbreak and the conflict between Russia and Ukraine, have underscored the importance of building resilient and diversified supply chains. As a result, governments have introduced a wave of tariffs aimed at encouraging domestic manufacturing and reducing over-reliance on specific countries.
Key Tariff Developments Impacting Manufacturing :
1. U.S.-China Tariffs
Beginning in 2018, the United States initiated a series of tariff measures on Chinese goods under Section 301 of the Trade Act, targeting a wide range of imported products. These tariffs targeted a wide range of goods including electronics, industrial machinery, automotive parts, metal components, and consumer goods.
- Tariff rates ranging from 10% to 25% have significantly raised costs for U.S. companies importing from China.
- These increased costs are especially burdensome for industries reliant on low-cost manufacturing in China, such as electronics assembly, furniture, and custom fabricated components.
As a result, American manufacturers and OEMs are now looking for China manufacturing alternatives with more favorable tariff exposure—and India is emerging as the top candidate.
2. EU Anti-Dumping Duties on Chinese Metals
The European Union, too, has taken a tougher stance against China’s alleged dumping of steel and aluminum products. The EU Commission has imposed anti-dumping duties ranging from 17% to 74% on various categories of Chinese metal goods.
- These duties were designed to protect European manufacturers, but they’ve also redirected demand toward non-Chinese suppliers.
- This is especially relevant in sheet metal fabrication, automotive components, and industrial equipment manufacturing, where material cost is a major input.
- India, with its growing network of fabricators and competitive pricing, is increasingly becoming a viable source for European companies seeking tariff-free metal imports.
3. India’s Protective Tariffs
In response to global trade dynamics, India has implemented a carefully crafted tariff strategy to bolster its domestic production sectors, aligned with the broader “Atmanirbhar Bharat” (Self-Reliant India) vision.
- Tariffs have been increased on a range of imports including solar panels, consumer electronics, LEDs, automotive parts, and electrical machinery to encourage local manufacturing in India.
- This is part of the broader Make in India campaign, aimed at reducing dependency on imports and making India a global manufacturing destination.
- For foreign companies, this creates a strong incentive to manufacture in India for the Indian market—thereby avoiding import duties while tapping into a massive consumer base.
- The Production Linked Incentive (PLI) schemes further reinforce this strategy by offering financial benefits to companies setting up factories in India.
Why India? Comparing Manufacturing Advantages
Several core advantages are positioning India as not just an alternative to China, but in many cases, a more sustainable and strategic choice for global manufacturing.
Several core advantages are positioning India as not just an alternative to China, but in many cases, a more sustainable and strategic choice for global manufacturing.
Key Comparison: India vs. China in Manufacturing
| Factor | China | India |
| Labor Cost | Rising significantly | Lower and competitive |
| Workforce Availability | Aging population | Young and expanding workforce |
| Tariff Exposure | High (due to ongoing trade wars) | Lower tariff risk |
| Government Incentives | Focused on high-tech only | Broad-based manufacturing support |
| Infrastructure | Highly developed | Rapidly improving with major projects |
| Ease of Doing Business | Slipping due to regulatory pressure | Improving steadily |
| Political Relations | Strained with West | Stronger ties with U.S., EU, Japan |
With lower labor costs, a democratic system of governance, and strong diplomatic ties with key global economies, India is becoming an attractive destination for manufacturers looking for stability and cost-effectiveness.
The Role of “Make in India” and PLI Schemes
To accelerate its integration into the global manufacturing ecosystem, the Indian government has launched several policy initiatives, most notably the “Make in India” campaign. Launched in 2014, this initiative aims to position India as a worldwide leader in product design and top-tier manufacturing.
Key Government Initiatives:
- Production Linked Incentive (PLI) Schemes: These offer financial incentives for manufacturers in electronics, automotive, pharmaceuticals, and other sectors to set up production in India.
- Simplified Regulatory Environment: Single-window clearances, digitization of compliance processes, and reduced corporate tax rates are encouraging foreign investment.
- Infrastructure Investments: Projects like the Delhi-Mumbai Industrial Corridor and smart manufacturing parks are enhancing connectivity and efficiency.
These initiatives are helping India close the infrastructure and logistics gap with China while offering favorable policies to global businesses.
Shifting Supply Chains and Global Response
Multinational companies across industries are re-evaluating their global supply chain strategies. From electronics and automotive to aerospace and heavy machinery, manufacturers are either expanding into India or relocating altogether.
Notable Industry Moves in CNC Machining, Sheet Metal, and Fabrication
As global manufacturers seek resilient, cost-effective alternatives to Chinese suppliers, many are turning to India for critical operations like CNC machining, sheet metal fabrication, and custom metal part production. This shift is particularly evident in industries that require high-precision components and scalable fabrication capacity.
- Automotive and EV Component Suppliers are increasingly establishing CNC machining partnerships in India to produce transmission housings, engine brackets, and custom drivetrain parts—reducing dependency on Chinese foundries.
- Industrial Equipment Manufacturers are sourcing sheet metal enclosures, brackets, and control panel assemblies from Indian fabricators, citing better cost-efficiency and reliable lead times.
- Global OEMs in sectors like aerospace and electronics are working with Indian suppliers to handle small-batch CNC jobs, laser cutting, and complex metal bending to meet prototype and production needs with precision.
- American Axle & Manufacturing, for example, is actively exploring relationships with Indian sheet metal fabricators and machining vendors to streamline costs and boost tariff-compliant sourcing strategies.
These moves underscore the growing trust in India’s fabrication ecosystem to deliver quality, consistency, and scalability—especially in CNC precision work and custom sheet metal components, where HanaV plays a key enabling role.
Your Global Supply Chain Partner in Indian Manufacturing
Making the shift from China to India for manufacturing is not a simple plug-and-play—it requires deep regional expertise, reliable partnerships, and a strong on-ground presence. That’s where HanaV stands out as a strategic ally. As a trusted India-based manufacturing and supply chain partner, HanaV helps global businesses—particularly those in precision metal fabrication, custom component manufacturing, and assembly line sourcing—seamlessly transition their production operations to India. With robust in-country logistics and documentation expertise, HanaV ensures that clients avoid disruptions, reduce manufacturing costs, and maintain compliance with evolving trade regulations.
Currently supporting companies across North America, Europe, and East Asia, HanaV plays a critical role in helping businesses increase flexibility, diversify their supply chains, and minimize tariff exposure. Whether you’re exploring China manufacturing alternatives or looking to expand your global footprint, HanaV provides the clarity, coordination, and cost-efficiency needed to succeed in India’s dynamic manufacturing ecosystem. 👉 Contact sales@hanav.in, visit www.hanav.in, or call +91 9148785173 HanaV today to explore customized solutions for your India-centric manufacturing strategy.
Conclusion
India is emerging as the preferred destination for manufacturing, not merely an alternative option. Amid rising tariffs, supply chain disruptions, and shifting geopolitical landscapes, global businesses are realizing the strategic value of diversifying away from China.
With competitive costs, improving infrastructure, government incentives, and strong international relations, India is positioned to lead the next wave of global manufacturing. Companies that adapt early to this shift will gain not only in terms of resilience but also in profitability and long-term growth.
As you consider your global manufacturing strategy, don’t just react to tariffs—reimagine your supply chain with India at the core.
