Global supply chains are being reconfigured away from China, yet Chinese inputs remain embedded through third countries. Critically analyse the implications for India's manufacturing strategy.

Between 2017 and 2022, China's share of US imports fell from 21.6% to 16.3%, yet supply chains "remain intertwined with China" [2]. Final assembly has moved, but the Chinese supplier base behind it has not. So India must aim to capture value, not just host factories.

Why Chinese inputs stay embedded

• More than 60% of China's exports to the Asia-Pacific region are intermediate goods [1].
• In Vietnam, Bangladesh and Cambodia, sectors hit by US tariffs raised exports to the US and imports of Chinese parts at the same time. The IMF calls these "China-plus-one" chains [1].

Opportunities for India

• The WTO names India among the economies gaining from the reorganisation of Chinese-led chains [3].
• Headroom: India accounts for about 4% of global electronics demand but less than 1% of exports. NITI Aayog targets $500 bn of output and more than 35% domestic value addition by FY30 [5].
• Stricter rules of origin reward exporters who can prove real local value addition [1].

Risks and constraints

• India missed the first wave: from 2018 to 2023, India's value-added exports to the US in tariff-hit sectors grew about 20% less than in its other sectors. Vietnam and Bangladesh gained about 20% [1]. The IMF notes India's fast services growth may understate its result.
• Openness to FDI decided the winners, and the biggest gainers also drew Chinese investment [1]. This conflicts with Press Note 3 (2020), which requires government approval for FDI from countries sharing a land border with India.
• South Asia has the highest non-tariff barriers of any region, about 14–15 on the IMF's 0–20 index [1].
• If incentives reward assembly only, products risk being "Indian on paper, Chinese inside" and could lose market access [1].

A calibrated strategy

• Shift PLI support from assembly to components through the Electronics Component Manufacturing Scheme.
• Screen FDI sector by sector: allow low-risk parts, and apply strict checks to chips and telecom.
• Cut non-tariff barriers and sign deeper trade agreements [1].
• Diversify sources of upstream, shock-prone inputs instead of cutting off China abruptly [4].

China-plus-one relocates assembly, not the supplier ecosystem. India will gain only if it builds its own component base while staying open to investment. A strategy that combines deeper component manufacturing with sector-wise screening fits Atmanirbhar Bharat and SDG 9. It can turn "China-plus-one" into lasting "India-first" value addition.