This report is from this week’s CNBC’s “Inside India” e-newsletter which brings you well timed, insightful information and market commentary on the rising powerhouse and the massive companies behind its meteoric rise. Like what you see? You may subscribe right here.
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The massive story
It has been a packed week for information, however one story that basically stood out was Shein’s India pivot.
You’ve got most likely heard of Shein; if not, simply ask your supply driver. They will provide the full rundown. The fast-fashion large that retains Gen Z and millennials endlessly scrolling for issues they do not actually need is now planning to ramp up manufacturing in India, in response to Reuters.
So, why the shift? In a phrase: technique.
Because the U.S.-China commerce conflict lingers and provide chain vulnerabilities come below the highlight, international firms are redrawing their manufacturing maps — and lots of have a pin in India.
However let’s be clear: this is not only a one-off quick style headline. It is a part of one thing greater. What we’re seeing is a gradual however regular recalibration. Corporations throughout industries — from smartphones to semiconductors to aerospace — are quietly reassessing the place and the way they construct issues.
And more and more, they’re wanting past China.
Take Apple. Simply final month, Foxconn dedicated $1.5 billion to increase its iPhone facility in Tamil Nadu. That is a hefty sign of confidence. Proper now, about 18% of all iPhones are made in India — a quantity that was within the low single digits only a few years in the past. In accordance with analysts, that would rise to 25% by 2027. By way of exports, India shipped $24.14 billion value of smartphones in 2024-25, marking a 55% improve from the earlier yr.
Google is making related strikes. The corporate has introduced it is going to begin assembling Pixel smartphones in India, partnering with Dixon Applied sciences. The hope is to double {hardware} income within the area — and get nearer to one of many fastest-growing smartphone markets on the planet.
Workers work on an meeting line in a cell phone plant in Tamil Nadu, India, on July 12, 2019.
Bloomberg | Bloomberg | Getty Photos
However the pattern does not cease with shopper tech.
Vietnamese electrical automobile maker VinFast is constructing a $2 billion plant in Tamil Nadu. The objective? To show India into an export hub for its vehicles. Aerospace giants like Airbus and Pratt & Whitney are additionally sourcing extra elements from Indian suppliers. In accordance with information from India’s Ministry of Commerce, aerospace exports rose 38% year-on-year in 2023-2024.
So no — this is not nearly Shein. It is a few broader realignment throughout sectors, pushed by a mixture of geopolitics, economics, and technique.
This is the backdrop: the U.S.-China commerce relationship stays tense. Tariffs have endured by way of a number of administrations. Add to that rising scrutiny over information privateness, nationwide safety, and tech transfers — and you’ve got a fancy equation that international companies are more and more seeking to clear up.
The reply for some is to unfold their bets.
That is the place India enters the body: not essentially because the substitute for China, however as a substitute. With its massive, younger labor power, and a authorities that is providing manufacturing incentives just like the Manufacturing-Linked Incentive (PLI) scheme, India is pitching itself as an interesting selection for firms seeking to diversify.
The PLI scheme alone, launched in 2020, covers greater than a dozen sectors, together with electronics, prescribed drugs, photo voltaic modules, and textiles. In accordance with authorities figures, over $33 billion in dedicated funding has been tracked below the initiative thus far.
However let’s not get too carried away.
As a result of even with momentum on its facet, India’s path is not with out hurdles.
“India will not be with out danger on this respect,” Susannah Streeter, head of cash and markets at Hargreaves Lansdown, informed CNBC’s Karen Gilchrist this week. “There have been experiences of labor violations amounting to compelled and little one labor occurring on cotton farms supplying to a few Indian textile suppliers to 60 multinational clothes manufacturers.”
These considerations aren’t remoted. For all of its industrial push, India nonetheless grapples with logistical bottlenecks, regulatory crimson tape, and patchy infrastructure in lots of areas. The World Financial institution’s Logistics Efficiency Index positioned India thirty eighth in 2023; higher than it was, however nonetheless behind a number of Southeast Asian friends like Malaysia and Thailand.
And but, for a lot of firms, it is now not about selecting probably the most environment friendly provide chain — it is about constructing a resilient one.
That is very true in a world the place pandemics, port disruptions, and political tensions can upend manufacturing in a single day. India, with its scale and democratic setup, presents a comparatively secure choice in an more and more unstable world.
Nonetheless, it is not a positive guess.
A 2023 report by Nomura confirmed that whereas India had gained some market share in international exports — particularly in electronics and equipment — nations like Vietnam, Mexico, and even Bangladesh had additionally benefitted from the “China + 1” technique. In a subsequent report, in 2025, Nomura reaffirmed that India is poised to be one of many greatest winners within the subsequent spherical of supply-chain reallocation.
So the story is not “India wins, China loses.” It is extra nuanced than that.
What we’re seeing is a rebalancing. A diversification of bets. A world the place firms aren’t simply chasing low prices — they’re searching for political alignment, incentives, and danger mitigation.
That makes India one in all a number of key gamers on this manufacturing reshuffle.
For traders, this presents each alternatives and caveats. The upside? An enormous home market, rising exports, and a gradual stream of international funding. The draw back? Execution dangers, governance points, and rising pains that may’t be ignored.
Finally, India’s rise within the manufacturing narrative is not nearly what it is doing proper, it is also about how international dynamics are altering.
And that is what makes the Shein story extra than simply quick style.
It is a signal of how firms are considering — globally, cautiously, and with an eye fixed on the lengthy recreation.
What do you assume?
— Spriha Srivastava
Must know
Air India Boeing 787 certain for London with 242 aboard crashes after takeoff in India. Boeing Dreamliner airplane with 242 individuals aboard crashed moments after takeoff from Ahmedabad in western India, native officers and the service mentioned Thursday. Air India Flight 171 was flying out of Ahmedabad certain for London Gatwick Airport when it was “concerned in a tragic accident at the moment,” Air India Chairman N Chandrasekaran mentioned.
India’s headline inflation eases to cooler-than-expected 2.82% in Might. India’s shopper inflation eased to 2.82% in Might, the nation’s Ministry of Statistics and Programme Implementation reported Thursday. Meals inflation, a key metric, hit 0.99% in Might, sharply under the 1.78% of April. Vegetable inflation dipped by 13.7% in April, with cereal value development up by 4.77% in Might.
India cuts rates of interest by 0.5 proportion level. The Reserve Financial institution of India on Friday lowered its benchmark coverage fee for the third consecutive time to five.5% from 6%, the bottom stage since August 2022. Economists polled by Reuters had anticipated the central financial institution to cut back charges by 0.25 proportion level. RBI Governor Sanjay Malhotra mentioned that the financial institution delivered an outsized minimize as a result of development has been “decrease than our aspirations amidst a difficult international surroundings and heightened uncertainty.”
India and the U.S. held commerce talks final week. Authorities officers mentioned the India-U.S. Bilateral Commerce Settlement with Assistant U.S. Commerce Consultant Brendon Lynch, sources informed CNBC-TV18. The talks, which occurred between June 4 and June 10 in New Delhi, had been “constructive,” the sources mentioned. Exterior Affairs Minister Subrahmanyam Jaishankar mentioned Tuesday he was hopeful a deal might be reached earlier than “reciprocal” tariffs resume on July 9.
Shein to maneuver manufacturing to India. In mild of the continuing U.S.-China commerce conflict, Shein is planning to extend its Indian suppliers to 1,000 from 150 inside a yr, Reuters reported Monday, citing sources. The Chinese language quick style large just lately partnered with Reliance Industries to deliver its model to India in February, after being banned from the nation in 2020.
— Yeo Boon Ping
What occurred within the markets?
Indian shares had been buying and selling in destructive territory Thursday, trailing losses throughout most Asian markets as traders assessed U.S. President Donald Trump’s declare {that a} commerce cope with China was “finished.”
The benchmark Nifty 50 fell 0.32% whereas the BSE Sensex had inched down 0.17% as of 10.50 a.m. Indian Customary Time.
Because the begin of the yr, the 50-stock benchmark has risen over 6%, whereas the BSE Sensex has gained 5.39%.
The benchmark 10-year Indian authorities bond yield was marginally decrease at 6.284%.
— Amala Balakrisher
On CNBC TV this week, Pranjul Bhandari, chief India economist at HSBC, mentioned that after inflation is below management, the Reserve Financial institution of India will likely be “absolutely targeted on development.” Bhandari famous that this new objective, which was talked about explicitly by the RBI governor, displays a “new RBI” with new priorities. The central financial institution’s minimize to the money reserve ratio additionally alerts a want to spice up development on a structural, not simply cyclical, stage.
Whereas entry to India’s marketplace for agricultural items is essential for the U.S. in its commerce talks with New Delhi, Washington ought to take a broader strategy in its negotiations with the South Asian nation, in response to Montek Singh Ahluwalia, a prime Indian economist and former deputy chairman of the Planning Fee in India. That is as a result of India’s “actual leverage” is its big providers and tech market — using ChatGPT, for instance, is “a lot better” in India than in lots of different nations, Ahluwalia mentioned.
— Yeo Boon Ping
What’s taking place subsequent week?
India will submit imports and exports information Friday, which might give a clearer image of the nation’s place concerning commerce negotiations with the USA. In the meantime, the U.S. Federal Reserve concludes it rate-setting assembly Thursday, and is predicted to carry charges regular at 4.25%-4.5%, in response to LSEG estimates.
June 13: India steadiness of commerce for Might
June 16: India wholesale value index for Might, perfume firm Sacheerome IPO
June 17: Jainik Energy Cables IPO
June 19: U.S. Federal Open Market Committee rate of interest resolution, furnace element producer Monolithisch India IPO
— Yeo Boon Ping
