India’s recently sealed trade deal with the United States has brought fresh focus to the China+1 strategy, a global business approach aimed at reducing dependence on China. Finance Minister Nirmala Sitharaman has said that the agreement could help this strategy “play out fully,” offering new opportunities for Indian exporters and attracting more global investment into the country.
The trade pact, finalised after months of tense negotiations, reduces US tariffs on Indian imports to 18%. Earlier, these duties had gone as high as 50%, making Indian goods more expensive in the American market. With tariffs now lowered, Indian products are expected to become more competitive, especially compared to rivals from other developing economies.
Sitharaman described the deal as a major relief for exporters and said it could improve India’s position in global supply chains. She also linked the agreement to broader economic trends, including foreign investment flows and the global push to diversify manufacturing away from China.
The China+1 strategy is a business and investment approach that encourages companies to reduce their heavy dependence on China by adding at least one more country to their manufacturing or sourcing plans. In simple terms, instead of producing everything in China, companies look for an additional base elsewhere.
The idea gained popularity around 2013, when global firms began to worry about overconcentration in China. While China offered low manufacturing costs and strong infrastructure, businesses started to see risks in relying too much on one country. These risks included rising labour costs, trade tensions, geopolitical issues, and supply chain disruptions.
Under the China+1 approach, companies keep a presence in China but expand operations into other countries. Nations like India, Vietnam, Thailand, and Indonesia have emerged as popular alternatives. These countries offer large workforces, growing domestic markets, and governments that are eager to attract foreign investment.
India, in particular, has been pitching itself as a strong China+1 destination. Its advantages include a large population, improving infrastructure, a growing manufacturing base, and policy initiatives aimed at easing business operations. Programmes such as “Make in India” and production-linked incentives are designed to encourage global companies to set up factories in the country.
According to earlier reports, around 18 global economies have shown interest in supply chain diversification under this strategy. For India, the China+1 trend is seen as a chance to boost exports, create jobs, and increase foreign direct investment.
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Finance Minister Sitharaman believes the new India-US trade deal could give a strong push to the China+1 strategy. By lowering tariffs, the agreement makes Indian goods cheaper and more attractive for US buyers. This could encourage American companies to source more products from India or shift parts of their manufacturing here.
Speaking about the deal, Sitharaman said it would be a “very welcome move” and a big relief for exporters. She noted that Indian exporters would now be in a better position compared to their competitors, especially those facing higher tariffs.
The finance minister also spoke about India’s broader economic challenges, including the weakening rupee despite foreign exchange reserves crossing the $700 billion mark. She explained that capital inflows had slowed as some investors booked profits and exited. At the same time, new large investors had not yet come in at the desired scale.
According to Sitharaman, convincing global fund managers to invest in India is a challenge faced by many countries, not just India. However, she expressed optimism that the trade deal with the US could change investor sentiment. She said that after recent discussions, she expects capital flows to improve and the China+1 strategy to move forward more strongly.
Under the agreement, US tariffs on Indian goods have been reduced from 50% to 18%. A portion of the earlier duties had been imposed as penalties related to India’s oil trade with Russia. Former US President Donald Trump has claimed that Prime Minister Narendra Modi assured him India would stop buying oil from Moscow, though Indian authorities have not officially confirmed this.
Trump has also stated that India has committed to purchasing more than $500 billion worth of American goods, including energy, technology, agricultural products, and coal. However, there has been no formal confirmation from the Indian government on these figures so far.
Despite these uncertainties, experts say the trade deal sends a positive signal to global markets. It suggests closer economic ties between India and the US and reinforces India’s image as a reliable partner in global supply chains.
In simple terms, the China+1 strategy is about spreading risk and building resilience. With lower US tariffs and improved trade relations, India could become a key beneficiary of this shift. If global companies move even a small part of their operations from China to India, it could have a significant impact on manufacturing, exports, and employment in the country.
For now, the government hopes that the deal will not only help exporters but also attract long-term investment, allowing the China+1 strategy to finally take full shape in India.
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