India’s manufacturing moment is here

This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.

Each weekday, CNBC’s “Inside India” news show gives you news and market commentary on the emerging powerhouse businesses, and the people behind its rise. Livestream the show on YouTube and catch highlights here. 

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It’s been a packed week for news, but one story that really stood out was Shein’s India pivot.

You’ve probably heard of Shein; if not, just ask your delivery driver. They’ll give you the full rundown. The fast-fashion giant that keeps Gen Z and millennials endlessly scrolling for things they don’t really need is now planning to ramp up manufacturing in India, according to Reuters.

So, why the shift? In a word: strategy.

As the U.S.-China trade war lingers and supply chain vulnerabilities come under the spotlight, global companies are redrawing their production maps — and many have a pin in India.

But let’s be clear: this isn’t just a one-off fast fashion headline. It’s part of something bigger. What we’re seeing is a slow but steady recalibration. Companies across industries — from smartphones to semiconductors to aerospace — are quietly reassessing where and how they build things.

And increasingly, they’re looking beyond China.

Take Apple. Just last month, Foxconn committed $1.5 billion to expand its iPhone facility in Tamil Nadu. That’s a hefty signal of confidence. Right now, about 18% of all iPhones are made in India — a number that was in the low single digits just a few years ago. According to analysts, that could rise to 25% by 2027. In terms of exports, India shipped $24.14 billion worth of smartphones in 2024-25, marking a 55% increase from the previous year.

Google is making similar moves. The company has announced it will start assembling Pixel smartphones in India, partnering with Dixon Technologies. The hope is to double hardware revenue in the region — and get closer to one of the fastest-growing smartphone markets in the world.

But the trend doesn’t stop with consumer tech.

Vietnamese electric vehicle maker VinFast is building a $2 billion plant in Tamil Nadu. The goal? To turn India into an export hub for its cars. Aerospace giants like Airbus and Pratt & Whitney are also sourcing more components from Indian suppliers. According to data from India’s Ministry of Commerce, aerospace exports rose 38% year-on-year in 2023-2024.

So no — this isn’t just about Shein. It’s about a broader realignment across sectors, driven by a mix of geopolitics, economics, and strategy.

Here’s the backdrop: the U.S.-China trade relationship remains tense. Tariffs have persisted through multiple administrations. Add to that growing scrutiny over data privacy, national security, and tech transfers — and you have a complex equation that global businesses are increasingly looking to solve.

The answer for some is to spread their bets.

That’s where India enters the frame: not necessarily as the replacement for China, but as an alternative. With its large, young labor force, and a government that’s offering manufacturing incentives like the Production-Linked Incentive (PLI) scheme, India is pitching itself as an appealing choice for companies looking to diversify.

The PLI scheme alone, launched in 2020, covers more than a dozen sectors, including electronics, pharmaceuticals, solar modules, and textiles. According to government figures, over $33 billion in committed investment has been tracked under the initiative so far.

But let’s not get too carried away.

Because even with momentum on its side, India’s path isn’t without hurdles.

“India is not without risk in this respect,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, told CNBC’s Karen Gilchrist this week. “There have been reports of labor violations amounting to forced and child labor occurring on cotton farms supplying to three Indian textile suppliers to 60 multinational clothing brands.”

These concerns aren’t isolated. For all of its industrial push, India still grapples with logistical bottlenecks, regulatory red tape, and patchy infrastructure in many regions. The World Bank’s Logistics Performance Index placed India 38th in 2023; better than it was, but still behind several Southeast Asian peers like Malaysia and Thailand.

And yet, for many companies, it’s no longer about choosing the most efficient supply chain — it’s about building a resilient one.

That’s especially true in a world where pandemics, port disruptions, and political tensions can upend production overnight. India, with its scale and democratic setup, presents a relatively stable option in an increasingly unstable world.

Still, it’s not a sure bet.

A 2023 report by Nomura showed that while India had gained some market share in global exports — especially in electronics and machinery — countries like Vietnam, Mexico, and even Bangladesh had also benefitted from the “China + 1” strategy. In a subsequent report, in 2025, Nomura reaffirmed that India is poised to be one of the biggest winners in the next round of supply-chain reallocation.

So the story isn’t “India wins, China loses.” It’s more nuanced than that.

What we’re seeing is a rebalancing. A diversification of bets. A world where companies aren’t just chasing low costs — they’re looking for political alignment, incentives, and risk mitigation.

That makes India one of several key players in this manufacturing reshuffle.

For investors, this presents both opportunities and caveats. The upside? A huge domestic market, rising exports, and a steady stream of foreign investment. The downside? Execution risks, governance issues, and growing pains that can’t be ignored.

Ultimately, India’s rise in the manufacturing narrative isn’t just about what it’s doing right, it’s also about how global dynamics are changing.

And that’s what makes the Shein story more than just fast fashion.

It’s a sign of how companies are thinking — globally, cautiously, and with an eye on the long game.

What do you think?

Air India Boeing 787 bound for London with 242 aboard crashes after takeoff in India. Boeing Dreamliner plane with 242 people aboard crashed moments after takeoff from Ahmedabad in western India, local officials and the carrier said Thursday. Air India Flight 171 was flying out of Ahmedabad bound for London Gatwick Airport when it was “involved in a tragic accident today,” Air India Chairman N Chandrasekaran said.

India’s headline inflation eases to cooler-than-expected 2.82% in May. India’s consumer inflation eased to 2.82% in May, the country’s Ministry of Statistics and Programme Implementation reported Thursday. Food inflation, a key metric, hit 0.99% in May, sharply below the 1.78% of April. Vegetable inflation dipped by 13.7% in April, with cereal price growth up by 4.77% in May.

India cuts interest rates by 0.5 percentage point. The Reserve Bank of India on Friday lowered its benchmark policy rate for the third consecutive time to 5.5% from 6%, the lowest level since August 2022. Economists polled by Reuters had expected the central bank to reduce rates by 0.25 percentage point. RBI Governor Sanjay Malhotra said that the bank delivered an outsized cut because growth has been “lower than our aspirations amidst a challenging global environment and heightened uncertainty.”

India and the U.S. held trade talks last week. Government officials discussed the India-U.S. Bilateral Trade Agreement with Assistant U.S. Trade Representative Brendon Lynch, sources told CNBC-TV18. The talks, which took place between June 4 and June 10 in New Delhi, were “constructive,” the sources said. External Affairs Minister Subrahmanyam Jaishankar said Tuesday he was hopeful a deal could be reached before “reciprocal” tariffs resume on July 9.

Shein to move manufacturing to India. In light of the ongoing U.S.-China trade war, Shein is planning to increase its Indian suppliers to 1,000 from 150 within a year, Reuters reported Monday, citing sources. The Chinese fast fashion giant recently partnered with Reliance Industries to bring its brand to India in February, after being banned from the country in 2020.

— Yeo Boon Ping

Indian stocks were trading in negative territory Thursday, trailing losses across most Asian markets as investors assessed U.S. President Donald Trump’s claim that a trade deal with China was “done.”

The benchmark Nifty 50 fell 0.32% while the BSE Sensex had inched down 0.17% as of 10.50 a.m. Indian Standard Time.

Since the start of the year, the 50-stock benchmark has risen over 6%, while the BSE Sensex has gained 5.39%.

The benchmark 10-year Indian government bond yield was marginally lower at 6.284%.

— Amala Balakrisher

On CNBC TV this week, Pranjul Bhandari, chief India economist at HSBC, said that once inflation is under control, the Reserve Bank of India will be “fully focused on growth.” Bhandari noted that this new goal, which was mentioned explicitly by the RBI governor, reflects a “new RBI” with new priorities. The central bank’s cut to the cash reserve ratio also signals a desire to boost growth on a structural, not just cyclical, level.

While access to India’s market for agricultural goods is key for the U.S. in its trade talks with New Delhi, Washington should take a broader approach in its negotiations with the South Asian nation, according to Montek Singh Ahluwalia, a top Indian economist and former deputy chairman of the Planning Commission in India. That’s because India’s “real leverage” is its huge services and tech market — the use of ChatGPT, for example, is “much greater” in India than in many other countries, Ahluwalia said.

— Yeo Boon Ping

India will post imports and exports data Friday, which could give a clearer picture of the country’s position regarding trade negotiations with the United States. Meanwhile, the U.S. Federal Reserve concludes it rate-setting meeting Thursday, and is expected to hold rates steady at 4.25%-4.5%, according to LSEG estimates.

June 13: India balance of trade for May

June 16: India wholesale price index for May, fragrance company Sacheerome IPO

June 17: Jainik Power Cables IPO

June 19: U.S. Federal Open Market Committee interest rate decision, furnace component manufacturer Monolithisch India IPO

— Yeo Boon Ping