China is 'risky' for supply chains and India a favored destination for U.S. firms, survey shows

U.S. firms are increasingly viewing China as a risky bet for their supply chains — neighbor India is set to benefit as companies look elsewhere to set shop.

As many as 61% of the 500 executive-level U.S. managers surveyed by UK market research firm OnePoll said they would pick India over China if both countries could manufacture the same materials, while 56% preferred India to serve their supply chain needs within the next five years over China.

The survey showed that 59% of the respondents found it "somewhat risky" or "very risky" to source materials from China, compared with 39% for India. 

At least a quarter of the executives who participated in the independent, third-party survey, commissioned by marketplace India Index in December, do not currently import from either China or India. 

"Companies are seeing India as a long-term investment strategy as opposed to a short-term pivot to avoid tariffs," said Samir Kapadia, CEO of India Index and managing principal at Vongel Group, in an exclusive interview with CNBC. 

Warming ties between the U.S. and India, spearheaded by President Joe Biden and Prime Minister Narendra Modi, with the former's "friendshoring" policy aimed at encouraging U.S. companies to diversify away from China have also made India an attractive alternative. 

The relationship between the two countries entered a new chapter with Modi's state visit to the White House in June where a slew of deals on large collaborations in defense, technology and supply chain diversification were signed.

"The U.S. and China continue to sit in rather chilling air. Whereas there is a constant stream of iterations, conversations, dialogues and agreements between U.S. and India," Kapadia said. 

India has seen a flurry of announcements