The China+1 Opportunity and Electronics Exports

How global companies seeking alternatives to China helped India become a major smartphone exporter, and what it will take to capture more of global manufacturing.

For years, global companies relied heavily on China for manufacturing. Rising costs, trade tensions with the US and pandemic disruptions pushed many to adopt a China+1 strategy: keeping some production in China but adding another country.

India’s electronics boom

India became one of the biggest beneficiaries in smartphones:

Apple’s contract manufacturers, such as Foxconn and Tata Electronics, expanded iPhone assembly in India.
Samsung has a huge phone factory near Delhi.
Smartphones became one of India’s largest export items, with the US as a key market.

Government support through production-linked incentives, which reward companies for increased output, helped attract investment.

Why India?

A large domestic market.
A big workforce.
Government incentives.
Geopolitical trust with Western countries.

The value-addition question

Critics point out that much of India’s electronics production involves assembling imported components. The domestic value added is still relatively low, though rising. Components, chips and displays are mostly imported, often from China.

India is trying to build deeper supply chains through:

A component manufacturing scheme launched in 2025.
Semiconductor projects, including plants by Tata and Micron.

Competitors

India competes with Vietnam, Mexico, Indonesia and others for China+1 investment. Vietnam, in particular, moved earlier and has integrated deeply into electronics supply chains, helped by its trade agreements.

What helps

Lower logistics costs and faster customs.
Stable tariffs on components.
Flexible labour rules and skilled workers.
Trade agreements that give access to major markets.

The assembly line

At a factory near Chennai, thousands of workers assemble phones from imported parts. Each phone exported earns foreign exchange and supports jobs, but the most valuable parts, like chips, are still made elsewhere. Building those locally is the next challenge.

Thinking China+1 means companies leave China entirely

Most companies keep large operations in China and add capacity elsewhere, spreading risk rather than exiting.

Key takeaways

Companies adopted China+1 strategies after trade tensions and the pandemic.
India became a major smartphone exporter, especially through Apple's suppliers.
Domestic value added is rising but still limited.
India competes with Vietnam and others, and needs deeper supply chains.