India’s key sectors brace for demand surge as US tariffs on China shift global supply chains — Will they rise to the challenge?

Textiles, electronics, pharma, and auto components among key beneficiaries

India’s industrial and warehousing sector is set to benefit from shifting global trade dynamics as high US tariffs on Chinese goods prompt global manufacturers to explore alternative production hubs. Industry experts predict a surge in demand for manufacturing and supply chain infrastructure, positioning India as a key beneficiary of ongoing supply chain diversification.

The US decision to hike tariffs on a wide range of Chinese imports has created new opportunities for Indian industries, particularly in textiles, electronics, automotive components, and pharmaceuticals. While US tariffs on Indian goods are comparatively lower than those on China and many other Asian economies, Indian companies still face challenges due to rising import costs for machinery and raw materials.

Opportunities across multiple sectors

• Textiles and apparel: With escalating trade friction between the US and China, Indian textile exporters are expected to see increased demand from global buyers seeking alternative sources.
• Electronics manufacturing: Electronics production, supported by India’s Production-Linked Incentive (PLI) scheme, could see a sharp rise in exports and domestic investment.
• Automotive components: Tariff differentials favor Indian auto part manufacturers, opening new export routes to the US and Europe.
• Pharmaceuticals and chemicals: These sectors are poised to gain as global firms de-risk supply chains previously dependent on China.

“While India stands to benefit from global supply chain shifts, the imposition of US tariffs on certain goods could create headwinds for industries heavily reliant on American exports,” said Badal Yagnik, CEO of Colliers India. He warned that rising input costs could impact competitiveness in sectors such as pharma, automotive, and chemicals.

This may reduce production and temper the demand for warehousing and industrial space in export-driven regions, he added.

Domestic consumption and e-commerce fuel logistics demand

According to Anshul Singhal, Co-founder and Managing Director of Welspun One, logistics linked to domestic consumption remain strong and relatively unaffected by global trade tensions.

“First-mile and last-mile logistics, driven by India’s e-commerce growth and rising domestic demand, remain resilient. However, export-focused sectors may feel cost pressure due to increased tariffs,” Singhal said.

Despite challenges, he remains optimistic: “Since US tariffs on India remain relatively low, these trade shifts may encourage global manufacturing to pivot to India, enhancing demand for warehousing and industrial infrastructure.”

Favorable outlook despite short-term challenges

Mehul Shah, CEO of Lo-Goi Group India, said India is in a strong position compared to its regional competitors.

“Any dip in exports is expected to be temporary, offset by India’s robust internal consumption projected over the next five years,” he noted.

He also emphasized that while US tariff hikes may increase costs for American consumers and corporations, large-scale domestic manufacturing setups in the US are unlikely in the near future. This opens a sustained window of opportunity for India.

Government initiatives boosting sector growth

India’s PLI schemes, ‘Make in India’ initiative, and rising foreign direct investment (FDI) are drawing global manufacturers to establish operations within the country. Combined with a rapidly growing e-commerce market, urban consumption, and infrastructure investment, these factors are fueling the expansion of industrial and logistics hubs across India.

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