China Plus One: Why More US OEMs Are Adding India to Their Contract Manufacturing Strategy
For nearly two decades, "sourcing overseas" was shorthand for "sourcing from China." That assumption has been unraveling since 2018, and the pace has only picked up since. Tariff volatility, freight disruptions, and a string of geopolitical shocks have pushed US OEMs and Tier 1/2 manufacturers to ask a harder question: supply chain consulting what happens if our entire supply base sits in one country?
The answer, for a growing number of manufacturers, is a "China plus one" strategy — keeping existing China relationships where they still make sense, while building a second, independent supply base elsewhere. India has emerged as one of the strongest candidates for that second leg, particularly for metal-intensive components like castings, forgings, and precision machined parts.
Why India, Specifically?
India's manufacturing base didn't appear overnight. The country has decades of experience in sand and investment casting, forging, and CNC machining, built originally to serve its own large domestic automotive and industrial sectors. That installed capacity — foundries, forge shops, and machine shops that already understand automotive-grade tolerances and documentation — is exactly what makes India viable for OEM programs today, rather than a market still building basic capability from scratch.
A few factors keep coming up in conversations with sourcing teams evaluating the shift:
- Cost competitiveness that has held up better than some other alternative sourcing regions as wages and input costs elsewhere have risen. Established metals expertise — India is a major global producer of forgings, fasteners, and castings, not just a low-cost assembly point. English-language business practice, which reduces friction in technical documentation, quality reporting, and day-to-day program communication. A large and growing engineering talent pool supporting design-for-manufacturing and quality functions.
The Part Everyone Underestimates: Quality Systems, Not Just Price
The mistake many first-time buyers make when moving sourcing to a new country is treating it purely as a cost exercise. For OEM and Tier 1/2 programs, the real gating factor is whether a supplier can execute to the same quality system a domestic Tier 1 would be held to — APQP planning, PPAP submission packages, process capability studies, and control plans.
A country can have excellent manufacturing capability and still fail an OEM program if nobody is managing the quality documentation and supplier oversight on the ground.This is where the difference between a trading company and a true sourcing partner shows up. A broker can find you a factory and negotiate a price. Managing APQP/PPAP compliance, conducting in-person supplier audits, and catching quality drift before it reaches a shipping container requires an actual physical presence in-country — not a quarterly video call.
Trade Risk Doesn't Disappear — It Just Moves
Diversifying away from a single-country supply base reduces one kind of risk but introduces others: new HTS classification questions, different country-of-origin rules, and currency exposure in a different set of markets. Programs that shift sourcing without also building out tariff classification and FX monitoring tend to trade one blind spot for another.
The manufacturers having the smoothest transitions are the ones treating trade and tariff strategy as part of the sourcing decision from day one — not as a compliance step bolted on after parts are already shipping.
What Good India Contract Manufacturing Actually Looks Like
Firms doing this well typically combine three things: an in-country team that can physically audit and manage suppliers, a quality system that mirrors what OEMs expect from domestic Tier 1 suppliers, and program management that gives the client a single point of contact rather than a rotating cast of vendors.
One firm built specifically around that model is IC&T Manufacturing, a US-based contract manufacturing and sourcing consultancy with its primary operations hub in Pune, India. IC&T manages castings, forgings, CNC machined parts, fasteners, gears, and plastic injection molded components sourced from India, with APQP/PPAP oversight handled in-country rather than remotely. For OEM and Tier 1/2 manufacturers evaluating a China-plus-one move into India, that kind of on-the-ground presence is generally the difference between a program that scales and one that stalls at the first quality escape.
The Takeaway
China plus one isn't about abandoning existing supply relationships — it's about not being one geopolitical event away from a stalled production line. India has the industrial base, the talent, and increasingly the quality infrastructure to be a legitimate second leg of that strategy, provided the sourcing partner managing it actually has boots on the ground.
Learn more about India contract manufacturing and OEM sourcing at inconsultingandtrade.com.