India Emerges As Top Beneficiary Of 'China + 1' Strategy Amidst Global Supply Chain Shift, Reports Nomura

India and Vietnam are likely to be the two biggest Asian beneficiaries of the China + 1 strategy, as firms seek to set up or expand production facilities amidst great reshuffle in global supply chains, Nomura said in a report on Tuesday.

"Our results show that Asia is still the main beneficiary of shifting supply chains. India has received the most interest from firms (28 out of 130 firms) regarding setting up or expanding production facilities, followed by Vietnam, Mexico, Thailand, and Indonesia," the Japanese financial firm said.

"These results differ slightly from our 2019 survey. During that phase, when relocation out of China was in its initial phases, our sample showed Vietnam as the biggest beneficiary," the Nomura economists wrote in a research note.

India's large domestic consumer market has significantly enhanced its attractiveness, drawing interest from firms in electronics, apparel and toys, automobiles and components, capital goods, and semiconductor manufacturing.

"We believe the low production linked incentive (PLI) disbursements are not a good reflection of India's potential on global value chain integration. Its large market size, faster growth, lower labour cost and political and economic stability make it an attractive investment destination for consumer goods production to both cater to domestic demand and also for exports," Nomura stated, anticipating India's share of global trade to rise to 2.8 per cent by 2030.

According to Nomura’s estimates, this trend of shifting supply chains is expected to boost India's exports from $431 billion in 2023 to $835 billion by 2030, representing an annual growth rate of 10 percent.

“Equity opportunities are several across countries and sectors, but we are most excited about India. Investors need to be patient in the short term, but we expect a larger impact on fundamentals and more opportunities over time,” Nomura said.