China plus one strategy – Bharat Pulse News

For decades, China occupied an extraordinary position in the global economy. Multinational corporations moved their factories to Chinese industrial centres, attracted by inexpensive labour, enormous production capacity, efficient logistics and manufacturing ecosystems that could produce almost anything at competitive prices. From smartphones and computers to automobiles, machinery and industrial components, China gradually became the world's manufacturing powerhouse. What began as a commercially attractive arrangement eventually evolved into an extraordinary concentration of industrial power. Companies across continents became dependent on Chinese factories, while governments discovered that their infrastructure projects, industries and even essential services relied upon supply chains concentrated within China's borders. However, the very dependence that made China economically indispensable has increasingly become a strategic concern. When critical machinery, components or raw materials are controlled by suppliers operating under a government willing to impose export restrictions, commercial relationships can become vulnerable to geopolitical decisions. Recent Chinese restrictions on rare earth-related products and now Tunnel Boring Machines have reinforced these concerns. For countries investing billions in infrastructure and industrial development, the question is no longer simply where products can be manufactured most cheaply, but where they can be sourced reliably without becoming excessively dependent on one country. This changing calculation presents India with an opportunity extending far beyond its domestic manufacturing ambitions. With its cost-competitive skilled workforce, expanding infrastructure and growing industrial ecosystem, India is positioning itself to become an important alternative manufacturing destination for the world. China's Tunnel Boring Machine Restrictions Could Accelerate India's Manufacturing Rise On October 19, 2026, China announced fresh export controls on specified Tunnel Boring Machines (TBMs), related equipment and technologies, with the new licensing requirements scheduled to take effect on November 18. These enormous machines are essential for constructing metro networks, high-speed railway tunnels, highways and underground infrastructure. Although the measures are not a blanket export ban, they demonstrate how access to strategically important industrial equipment can become subject to additional government approvals. India had already experienced difficulties involving German manufacturer Herrenknecht, whose machines manufactured in China faced customs clearance delays while awaiting shipment to Indian infrastructure projects. The response illustrates an important shift in manufacturing geography. Herrenknecht has been expanding its Indian manufacturing presence around Chennai, while India is developing the capacity to manufacture increasingly larger tunnelling machines. Railway Minister Ashwini Vaishnaw recently highlighted domestic manufacturing of machines around eight and fifteen metres in diameter, alongside ambitions to produce machines exceeding sixteen metres. Much of this capability still involves foreign technology, but the industrial capacity, local suppliers and engineering expertise being developed in India are strategically valuable. If Chinese export controls encourage manufacturers to expand operations elsewhere, India could become one of the beneficiaries of Beijing's own restrictive policies. From iPhones to Heavy Machinery: India's Industrial Transformation Is Already Visible The transformation is already visible in industries where Indian manufacturing has moved beyond supplying domestic consumers to serving international markets. According to government figures, India's mobile phone exports reached approximately ₹2.59 lakh crore during FY2025-26, compared with around ₹1,500 crore in FY2014-15. International companies, including Apple and its manufacturing partners, have expanded Indian production as part of broader efforts to diversify their global operations. India's total electronics exports reached approximately ₹4.24 lakh crore in FY2025-26, demonstrating that manufacturing expansion is increasingly translating into international sales. The story extends beyond consumer electronics. India's pharmaceutical exports reached approximately $31.13 billion in FY2025-26, supplying medicines to markets across the world. Its automobile industry has also established substantial export capabilities, with passenger vehicle exports exceeding 900,000 units and two-wheeler exports reaching approximately 5.18 million units during the same financial year. Meanwhile, investments in semiconductor fabrication, electronics components and advanced engineering are laying the foundations for industries that require considerably greater technological sophistication. Tunnel Boring Machines represent another potential addition to this expanding industrial landscape, showing how India's manufacturing ambitions are moving into increasingly complex equipment. India's Greatest Advantage Is Its Cost-Competitive Skilled Workforce China's original manufacturing success was built partly upon an abundant workforce capable of producing goods at internationally competitive prices. India now possesses an opportunity to develop a comparable advantage, supported by its large working-age population, extensive engineering talent and growing industrial experience. According to S&P Global Market Intelligence estimates reported by Mint, average manufacturing wages in India stood at approximately $3.45 per hour in 2025, compared with $5.83 in mainland China. This represents an hourly wage differential of approximately 41%, a potentially significant commercial advantage for manufacturers evaluating new production locations. Yet India's attraction is not limited to inexpensive labour. Its industrial workforce includes engineers, technicians, designers, skilled machine operators and manufacturing professionals capable of supporting increasingly sophisticated production processes. Wages alone cannot determine competitiveness, because productivity, infrastructure, logistics and reliable supply networks also influence manufacturing costs. However, when competitive labour costs are combined with improvements in industrial infrastructure and technical capabilities, India offers international manufacturers a proposition that deserves serious consideration. The opportunity is particularly significant for labour-intensive industries, precision engineering, electronics assembly and manufacturing operations seeking to diversify their production without sacrificing commercial competitiveness. China May Be Creating the Very Manufacturing Competitors It Wants to Contain There is a fundamental contradiction in attempting to preserve industrial influence through restrictions that encourage customers to seek alternatives. China's enormous manufacturing capacity gives it considerable leverage over international supply chains, but that leverage also creates incentives for governments and companies to invest in competing production centres. A manufacturer that experiences repeated difficulties obtaining critical components may conclude that developing an alternative supplier is worth the initial investment. Once new factories, supplier networks and technical capabilities have been established elsewhere, those investments can become permanent features of the global industrial landscape. This is precisely why the developments surrounding Tunnel Boring Machines deserve attention. Restrictions intended to control strategically sensitive equipment may encourage foreign manufacturers to deepen their presence in countries such as India. The same broader calculation applies to rare earth processing, electronics components and other industries where concentrated supply chains expose buyers to disruption. China may retain substantial technological and manufacturing advantages for years, but every additional production facility established outside its borders creates another source of competition. The strategic irony is that policies designed to preserve supply-chain influence could gradually accelerate the diversification that diminishes exclusive dependence on Chinese manufacturing. India's Opportunity Is Bigger Than Replacing Chinese Imports. It Can Supply the World. For India, reducing dependence on imported Chinese machinery and components is an important national objective. However, the greater opportunity lies beyond replacing imports. If India can manufacture products at internationally competitive prices, it can supply countries that are themselves seeking to diversify away from Chinese production. This distinction changes the scale of India's industrial ambitions. Instead of measuring success only by how much India manufactures for domestic consumption, the country can increasingly measure its progress through the international markets served by its factories. India's pharmaceutical industry already demonstrates how domestic manufacturing expertise can translate into global supply relationships. Smartphone and automobile exports are providing further evidence that international customers are willing to purchase products manufactured in India. Heavy engineering, industrial equipment and semiconductor components could eventually broaden this role. The September 2026 partnership announced between Tata Electronics and Dutch semiconductor company Nexperia, covering fabrication, assembly, testing and technological collaboration, illustrates the growing international interest in India's advanced manufacturing ecosystem. In the longer term, a country capable of supplying critical machinery, electronic components and industrial products to multiple international markets becomes more than a manufacturing destination. It becomes an important contributor to global supply-chain resilience. From Foreign Manufacturing to Indian Technology: The Next Industrial Frontier Foreign companies establishing manufacturing operations in India should be recognised as an important part of this transformation. Their investments create industrial employment, support domestic suppliers, introduce advanced production practices and connect Indian factories to international customers. German machinery manufacturers, American technology companies and multinational electronics producers can contribute significantly to India's industrial development even when the original technology remains foreign-owned. Manufacturing ecosystems rarely emerge overnight, and participation in international production networks provides valuable opportunities for domestic businesses to acquire experience and expand their capabilities. The next stage, however, must involve greater Indian ownership of technology, original product development and advanced component manufacturing. Indian companies such as BEML, Larsen & Toubro and Tata Electronics have opportunities to expand their participation in sophisticated industrial sectors. Domestic suppliers of precision machinery, semiconductors, mechanical components and automated systems could become important exporters in their own right. India's challenge is to convert today's manufacturing investments into tomorrow's Indian-designed products, proprietary technologies and globally competitive industrial brands. Achieving that transformation would strengthen its position not only as an alternative location for foreign factories but also as an independent source of advanced manufacturing expertise. China Made Itself Indispensable. India Can Give the World a Choice. China's emergence as the world's manufacturing powerhouse was one of the defining economic developments of the past half-century. Its industrial strength cannot be dismissed, and India will need sustained investment, technological development and productivity improvements to compete across increasingly complex sectors. Yet the changing priorities of international manufacturers are creating an opening that India is increasingly capable of exploiting. The global economy does not need every factory to leave China, nor does India need to manufacture every product currently produced there. What matters is the development of credible alternatives capable of preventing excessive dependence on a single country's supply chains. For India, the opportunity is both economic and strategic. Its cost-competitive workforce, rapidly expanding manufacturing capabilities, domestic market and international industrial partnerships provide the foundations for a larger global role. China's growing use of export controls may strengthen its negotiating leverage in the immediate term, but it also gives customers additional reasons to diversify. India can turn this changing international environment into a lasting industrial advantage by becoming a dependable supplier of products, components and technologies to the world. China spent decades making itself indispensable to global manufacturing. India now has an opportunity to help make dependence on China optional.

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