India comes for China’s manufacturing crown as supply chains slowly shift

Warm weather’s early onset isn’t sapping the spirits of officials in Tamil Nadu this year. Instead, the mood is upbeat as one high-profile overseas investment after another has flowed into the southern Indian state over the past few months.

Shipping and logistics giant UPS also established a global technology hub in the city, beginning in August last year, while leading renewables energy firm First Solar has invested in a manufacturing facility.

But India now looks set to make a pivot, analysts say, and could soon challenge China’s manufacturing pre-eminence amid a changed world order.

Tamil Nadu is one of the country’s success stories. Home to more than 130 Fortune Global 500 companies, India’s southernmost state recently outlined an incentive programme aimed at encouraging investors to go beyond assembling low-value products, and manufacture high-value goods.

“What we have seen over the last two years is very, very strong interest in establishing advanced manufacturing facilities. Companies are also very keen to establish global capability centres here in India,” said Vishnu Venugopalan, managing director and CEO of Guidance Tamil Nadu, the state government’s investment promotion agency.

These were recently expanded in an attempt to usher in investments in sophisticated technologies like making satellites and space-launch vehicles.

A raft of reforms has also been introduced to cut red tape, such as a simplified tax code that has sped up logistics, and revamped infrastructure including arterial highways, brand new airports and a modernisation programme for the country’s antiquated railways.

“Is India like China [was] 15 years ago?” asked Kevin Carter, founder of the Emerging Markets Internet and ECommerce ETF, which has a