India vs China Manufacturing: Scale, PLI and Tariffs

By ChinaManufacturers.com Editorial Desk · Updated 30 October 2026 · How this page was researched

Can India replace China as a manufacturing source?

On overall scale, not soon; in a handful of incentive-backed sectors, India has already built large capacity. India, the South Asian country whose Production Linked Incentive program is aimed at building domestic manufacturing, had manufacturing value added (MVA — the value its factories add to purchased materials and components) of US$532.9 billion in 2025 on the World Bank's World Development Indicators. China's was US$4,822.7 billion. China's manufacturing base is therefore about nine times India's, by the Editorial Desk's calculation; both figures are in current US dollars and may be revised.

India's base is growing. Its MVA was US$398.2 billion in 2017, and US goods imports from India have more than doubled since then. The comparison below uses US Census Bureau data (nominal, not seasonally adjusted); the shares are calculated from the Census world total.

Period	US imports from India	Share of US goods imports	US imports from China	Share
2017	US$48.5B	about 2.1%	US$505.2B	21.6%
2024	US$87.3B	—	US$440.3B	13.5%
2025	US$103.8B	about 3.0%	US$308.7B	9.0%
Jan–Aug 2026	US$68.0B	about 2.8%	US$183.5B	7.5%

US imports from India rose about 19% in 2025 (Census, Trade in Goods with India). Even so, India supplied roughly a third as much to the US as China did that year. The shift away from China in US import data has gone mainly to Mexico and Southeast Asia; India's gain is real but smaller.

What India's PLI scheme is

The Production Linked Incentive (PLI) scheme is India's main manufacturing incentive program. Launched in 2020, it is a set of 14 sector-specific schemes that pay incentives tied to incremental sales — sales of goods made in India above a base year — rather than to investment alone. Each scheme is run by the relevant ministry, among them the Ministry of Electronics and Information Technology (MeitY), the Department of Pharmaceuticals, the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Heavy Industries. The incentive percentages for each sector were not available for this page.

The official figures come from PIB, the Press Information Bureau, which publishes the Government of India's official releases. Two PIB releases give different totals for the approved outlay, and both are stated here:

PIB, 3 March 2025: an approved outlay of ₹1.97 lakh crore (over US$26 billion), with actual investment of ₹1.46 lakh crore and about 9.5 lakh jobs as of August 2024.
PIB, 21 July 2026 (a written reply in the Lok Sabha, the lower house of Parliament): an approved outlay of ₹1.91 lakh crore across 14 sectors, as of 31 March 2026.

For readers outside India: one lakh is 100,000 and one crore is 10 million, so ₹1 lakh crore is ₹1 trillion. The releases do not explain the difference between the two outlay figures.

Where PLI investment has gone

According to the July 2026 PIB release, PLI schemes had attracted actual investment of over ₹2.40 lakh crore as of 31 March 2026, up from ₹1.46 lakh crore in August 2024. Reported employment was over 14.15 lakh: 8,49,069 direct jobs (written in the Indian digit grouping, that is 849,069) plus about 5.66 lakh indirect jobs. The indirect figure covers only three sectors. The release does not state how much incentive money has been disbursed.

Sector	Actual investment to 31 March 2026
Solar PV modules	₹64,873 crore
Pharmaceuticals	₹45,158 crore
Automobiles and components	₹44,326 crore
Specialty steel	₹23,896 crore
Large-scale electronics	₹20,580 crore

The same release states that about 99.2% of mobile phones used in India are now made domestically and that mobile phone imports are down about 77%, without giving an as-of date for either figure (PIB, 21 July 2026). Mobile phones are the clearest case of PLI building capacity that did not exist at scale before the program.

The concentration matters. Five sectors account for most of the reported investment. PLI headline totals describe those sectors, not Indian manufacturing as a whole.

What this means for an importer, by category

For an importer, India's capacity is uneven. It is deepest in mobile phones, pharmaceuticals and solar modules, where PLI money has gone. In categories outside the program, Indian supply is far thinner than China's: fewer factories, fewer component suppliers and less tooling capacity near the final assembler.

US-reported trade data from the UN Comtrade database show India gaining share in some metal and accessory categories from small bases. These are 2025 shares of US imports, on a CIF basis (cost, insurance and freight included), and may be revised:

Saddlery and harness, including leashes and collars (HS 4201): India 11.1%, against China 25.9%.
Other articles of aluminum (HS 761699): India 5.2%, up from 2.3% in 2018; China 24.1%.
Other articles of iron or steel (HS 732690): India 5.2%, up from 2.6% in 2018; China 28.1%.
Machinery parts not elsewhere specified (HS 848790): India 3.9%; China 6.8%.
Other articles of plastics (HS 392690): India 0.9%, up from 0.4% in 2018; China 33.7%.

These headings are proxies. Many metal and plastic parts are classified by function in other chapters, so the shares indicate direction rather than the full size of India's role. The pattern is consistent, though: India is growing in fabricated metal goods and remains marginal in molded plastics, where China and Mexico lead.

US tariffs on Indian goods as of October 2026

US duties on Indian goods have moved through three legal instruments since 2025:

August 2025: the US announced 50% tariffs on India under the International Emergency Economic Powers Act (IEEPA). Kearney's 2026 Reshoring Index estimates that the effective rate actually collected on Indian imports in 2025 (duties collected divided by customs value) was 10–13.5%. That is a consultancy estimate for calendar 2025, not a current rate.
20 February 2026: the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize tariffs. A 10% Section 122 surcharge on all countries applied from 24 February until it expired on 23 July 2026.
From 24 July 2026: USTR's Section 301 forced-labor action imposed an additional 10% duty on products of India and a group of other economies, and 12.5% on products of China (USTR notice, dockets USTR-2026-0265 and -0266).

As of October 2026, the gap between India and China is therefore wider than the 2.5-point difference in the forced-labor layer suggests. Chinese-origin goods also carry the 2018 China Section 301 list duties (25% or 7.5% by list) and any four-year-review increases. Section 232 duties on steel, aluminum, autos and other named products apply to both countries, and Section 232 goods are exempt from the forced-labor layer. The notice's annex exceptions were not reviewed line by line for this page, so a licensed customs broker should confirm the duty for a specific HTS line.

What the cost data does and does not show

No comparable official series of wages or total labor cost for India and China was available for this comparison. On the Chinese side, the National Bureau of Statistics reports 2025 average annual manufacturing wages of 113,594 yuan in urban non-private units (up 5.2%) and 76,055 yuan in urban private units (up 6.4%). Those are nominal wages for urban units only, not total labor cost. Kearney's 2026 index includes a cost comparison of products made entirely in India, Vietnam, China and Mexico, but its specific values were not extracted for this page.

The absence of a clean wage comparison is itself useful. A sourcing decision between the two countries turns on more than wages: the depth of the local supplier base, the tariff layers that apply to each origin, freight routing, and how many inputs the Indian factory still imports — often from China.

Common mistakes when comparing India and China

Reading PLI investment as general manufacturing capacity. It is concentrated in 14 named sectors, and five of them account for most of the money.
Mixing up outlay, investment and output. PIB reports approved outlay, actual investment and production or sales separately. The ₹1.91 lakh crore figure is a budget commitment, not money spent or goods made.
Comparing headline GDP instead of manufacturing. On manufacturing value added, China is about nine times larger (WDI 2025).
Using the August 2025 50% figure. It was an IEEPA tariff and no longer applies; the forced-labor Section 301 layer of 10% is the current additional duty.
Assuming Indian origin. As with any third country, goods assembled in India from Chinese components may remain Chinese-origin under the substantial transformation test.

Frequently asked questions

Can India replace China in manufacturing?

Not on overall scale in the near term. India's 2025 manufacturing value added was US$532.9 billion against China's US$4,822.7 billion, about one-ninth (World Bank WDI). In specific PLI sectors, especially mobile phones, India has built large capacity: PIB reports that about 99.2% of mobile phones used in India are now made domestically.

What is the PLI scheme in India?

PLI, the Production Linked Incentive scheme, is a set of 14 sector incentive schemes launched in 2020 that pay companies on incremental sales of goods made in India. PIB gives the approved outlay as ₹1.97 lakh crore in a March 2025 release and ₹1.91 lakh crore in a July 2026 parliamentary reply. Each sector's scheme is run by its own ministry.

How much investment has the PLI scheme attracted?

Over ₹2.40 lakh crore of actual investment as of 31 March 2026, according to a PIB release of 21 July 2026, up from ₹1.46 lakh crore in August 2024. Solar PV modules, pharmaceuticals and automobiles led. Reported employment was over 14.15 lakh, of which 8,49,069 were direct jobs; the release does not state incentive disbursements.

How much does the US import from India?

US goods imports from India were US$103.8 billion in 2025, about 3.0% of total US goods imports and up about 19% from 2024 (Census, nominal). For January through August 2026 they were US$68.0 billion, about 2.8%. China supplied US$308.7 billion in 2025, roughly three times as much.

What is the US tariff on Indian goods?

As of October 2026, Indian-origin goods carry an additional 10% Section 301 forced-labor duty, effective 24 July 2026, on top of the normal HTS rate. The 50% tariff announced in August 2025 was imposed under IEEPA and ended after the Supreme Court's February 2026 ruling. Section 232 and AD/CVD duties apply by product.

Is India cheaper than China for manufacturing?

The available official data cannot answer that directly. No comparable wage or labor-cost series for India and China was available. China's 2025 average manufacturing wage in urban non-private units was 113,594 yuan (National Bureau of Statistics). Total cost also reflects supplier depth, imported inputs, freight and a tariff stack that is currently lower for Indian origin than for Chinese.

India vs China for manufacturing