65 Increasingly, U.S. companies are reassessing China’s reliability for their supply chains, with India emerging as a preferred destination for business expansion. According to a survey conducted by UK market research OnePoll, 61% of 500 executive-level U.S. managers would choose India over China if both countries offered the same manufacturing capabilities. Moreover, 56% expressed a preference for India in meeting their supply chain needs over the next five years. The survey highlighted concerns among respondents, with 59% finding it “somewhat risky” or “very risky” to source materials from China, compared to 39% for India. Samir Kapadia, CEO of India Index and Managing Principal at Vongel Group, emphasized that companies view India as a long-term investment strategy rather than a short-term pivot to circumvent tariffs. The warming ties between the U.S. and India, underscored by President Joe Biden and Prime Minister Narendra Modi, further contribute to India’s appeal as an alternative. The “friendshoring” policy, encouraging U.S. companies to diversify away from China, aligns with India’s growing significance in the global supply chain. The U.S.-India relationship reached a new milestone during Prime Minister Modi’s state visit to the White House, where collaborations in defense, technology, and supply chain diversification were solidified. In contrast, U.S.-China relations remain strained. While India has witnessed a surge in investments, concerns persist. The survey revealed that 55% of respondents considered quality assurance a “medium risk” for factories in India. Delivery risk (48%) and intellectual property theft (48%) were additional concerns for U.S. firms eyeing India for their supply chains. Despite the optimism, caution prevails regarding India’s supply chain capabilities. Amitendu Palit, Senior Research Fellow at the Institute of South Asian Studies, cautioned against expecting an immediate shift similar to Apple’s presence in the country, citing Apple’s unique capacity to create an ecosystem rapidly. While India becomes a significant player, complete disengagement from China remains unlikely. Samir Kapadia emphasized that China will continue to be a cornerstone of the U.S. supply chain strategy, acknowledging the robust investments still flowing into China. In the quest for alternatives, Vietnam has also gained attention as part of a “China plus one” strategy. The Vietnamese market experienced a more than 14% surge in foreign direct investments last year compared to 2022, with $29 billion pledged from January to November. However, Kapadia highlighted that Vietnam lacks the extensive customer base that China offers, making India a more attractive option for companies aiming at both cost savings and access to markets. The decisions, he noted, are not solely driven by cost arbitrage but rather by the desire for both cost savings and market access, benefits not readily replicated by shifting to Vietnam. You Might Be Interested In Microsoft Challenges IRS Claim of $28.9 Billion Tax Bill After Audit The resurgence of Sam Altman — Microsoft Expands AI Team with Sam Altman & Greg Brockman Noltic Experts Explain Financial Sector’s Salesforce App Benefits Costco’s Gold Bar Sales Skyrocketing, Wells Fargo Estimates Intuit and The Farmlink Project: Fighting Food Waste and Climate Change A new era of opportunity for international graduates in Hong Kong
