India and Vietnam are emerging as key beneficiaries of the “China plus one” strategy, a global initiative aimed at diversifying supply chains away from heavy reliance on China. According to a recent report by Nomura, this strategic shift is expected to open up new avenues for growth across Asian economies.
Nomura’s analysis suggests a significant uptick in India’s export potential, projecting a surge to $835 billion by 2030, a substantial leap from the $431 billion recorded in 2023. Central to this growth trajectory is India’s robust domestic market, which is proving to be a magnet for companies seeking alternatives to China for their manufacturing and supply chain operations.
Industries spanning electronics, apparel, toys, automobiles, capital goods, and semiconductor manufacturing are increasingly eyeing India as a favourable investment destination, drawn by the prospect of tapping into its vast consumer base.
Of these sectors, electronics is anticipated to experience the most rapid expansion, with exports poised to register a staggering compound annual growth rate of 24 per cent, reaching $83 billion by 2030. Similarly, machinery exports are forecasted to more than double, climbing from $28 billion in 2023 to $61 billion by the end of the decade.
Nomura underscores that despite relatively modest production-linked incentive (PLI) disbursements, India remains primed for deeper integration into global value chains. The country’s appeal lies in a combination of factors, including its expansive market size, rapid economic growth, competitive labour costs, and stable political and economic landscape. These factors collectively position India as an attractive destination for manufacturing consumer goods, both for domestic consumption and export purposes.
Companies and their Chinese manufacturing partners who have moved away from China, and into Vietnam and India have seen some impressive numbers. More and more EU & US-based companies therefore want their manufacturing partners to move to India and Vietnam. Just last week, reports surfaced according to which, US-based EV maker Tesla has asked its partners to focus on India and Vietnam.
Moreover, Nomura predicts that India’s share of global trade will see a notable uptick, rising to 2.8 per cent by 2030, driven by the growing competitiveness of its production capabilities. This anticipated surge in trade is expected to contribute to an overall improvement in India’s trade balance and current account, potentially leading to currency appreciation.
Nomura’s research also highlights a growing interest among investors in both India and Vietnam. US-based companies, particularly in the electronics sector, are among the prominent players investing in India, while Japan and Korea are also making substantial investments across various sectors such as auto, consumer durables, and electronics. These investments are driven by the desire to leverage India’s expanding domestic market and utilize the country as a strategic manufacturing hub.
Looking ahead, the strengthening of India’s manufacturing sector and its increasing share in global exports are poised to bolster corporate sector growth, sustaining robust earnings growth rates of 12-17 per cent over the medium term.
