The China-Plus-One Dividend and Domestic Reform: India's Manufacturing Ascent During the Modi Era
Abstract: Was India's manufacturing ascent after 2014 earned at home or handed to it by geopolitics? This article argues that it was both, and that neither alone is sufficient. The US-China trade war (2018), the pandemic (2020) and Western "de-risking" (2022 onward) produced a large external shock: China's share of US goods imports fell from about 22% in 2017 to about 9% in 2025 [1][2]. The main beneficiaries were Taiwan, Vietnam and Mexico, each gaining roughly 2-4 percentage points; India gained only about one point, rising from about 2.1% to 3.1% of US imports [1][3]. India's gain was concentrated in one sector, smartphones, where its share of US imports rose from 13% to 44% in a single year [4]. The article argues that the China-plus-one dividend is conditional: it accrued to India only in sectors where domestic reforms- the Goods and Services Tax, the 2019 corporate tax cut, Production-Linked Incentives and selective tariff protection- had already lowered the cost of production and given anchor firms a reason to come. Where reforms lagged- land, labour (until the codes took effect in November 2025), logistics and trade policy- India lost the dividend to Vietnam and Mexico. The 2025 US tariff shock, which raised duties on Indian goods to 50% before a February 2026 framework cut them to a planned 18%, shows that the dividend is also reversible [5][6]. The article proposes a simple attribution framework- pull, push and capture- and concludes that reform determines how much of a geopolitical windfall a country captures.
Keywords: China-plus-one; supply-chain reallocation; friend-shoring; Make in India; Production-Linked Incentive; India-US trade; Vietnam; Mexico; manufacturing FDI
How to Cite?: Brajabandhu Mahanta, "The China-Plus-One Dividend and Domestic Reform: India's Manufacturing Ascent During the Modi Era", Volume 15 Issue 10, October 2026, International Journal of Science and Research (IJSR), Pages: 786-794, https://www.ijsr.net/getabstract.php?paperid=SR261012074940, DOI: https://dx.doi.org/10.21275/SR261012074940