US Firms Prefer India’s Supply Chains Over China due to Increased Security Measures

A recent survey conducted by market research firm OnePoll revealed that 61% of 500 U.S. managers would prefer to manufacture materials in India rather than China. This decision was largely influenced by the perceived risk involved in sourcing materials from China, with 59% of respondents finding it to be “somewhat risky” or “very risky”, compared to 39% for India. CEO of India Index, Samir Kapadia, noted that companies are increasingly viewing India as a long-term investment strategy, as opposed to a short-term pivot to avoid tariffs.

The survey also indicated that 56% of the U.S. executives surveyed preferred India over China for their supply chain needs in the next five years. The deteriorating relationship between the U.S. and China, coupled with warming ties between the U.S. and India, has made India an attractive alternative for supply chain diversification. Investments into India, such as the announcement by Maruti Suzuki to invest $4.2 billion in a new factory, further solidify this trend.

Despite the optimism, U.S. firms also expressed caution about India’s supply chain capabilities, with concerns about quality assurance, delivery risk, and IP theft. Vietnam has also emerged as an option for companies adopting a “China plus one” strategy, with a 14% surge in foreign direct investments. However, India’s access to a large customer base gives it an advantage that Vietnam does not offer, making it the preferred choice for companies looking for cost savings and access to markets.

Source .