India, China and the China+1 Strategy: Trade, Investment and Policymaking in a Fragmented World

ABSTRACT

COVID‐19 and geopolitical tensions have compelled global firms to diversify parts of their operations to other countries. Although India looks primed to gain from this ‘China+1’, the authors' research, including interviews with 50 executives, officials and experts across India, America, Europe and Singapore, paints a more cautious picture. Rather than signalling an exit from China, China+1 reflects a structural redesign of global production for a world shaped by geopolitical uncertainty, technological fragmentation and recurring disruption. The emerging global production system is unlikely to replace China but instead evolves towards a multi‐node structure in which India could become a major complementary pole of production and demand. However, the extent to which India can translate global firms' diversification into sustained industrial upgrading will depend on reducing operational frictions, upgrading its labour market, improving execution across states and deepening supplier ecosystems.