India top destination being explored by MNCs as alternative to China, finds global CEO survey

India is the top destination being explored by multinational corporations as an alternative to China, according to a survey of 100 CEOs who primarily represent foreign B2B-focused firms.

The CEOs also consider Vietnam, Thailand and their own home countries as potential options.

Amid China’s increasing geopolitical assertiveness, questionable trade and business practices, and rising labour costs, 88% of the CEOs who participated in research firm IMA India’s 2023 Global Operations Benchmarking Survey opted for India as their primary alternative to China. The survey was run among companies with a presence in India.


“In the last five years foreign MNCs have increased their onground presence in India, partly as a result of diversification away from China. In particular, the IT & ITES companies are ramping up the share of their global workforce that is based in India,” said Suraj Saigal, Research Director, IMA India.

According to a report based on the survey, nearly 70% of the firms saw substantial changes to their business strategies and onground operations in China in the past three years. The industrial sector shows a more prominent pull-back compared to the services sector. Among those implementing changes 56% have decreased their sourcing from China and 41% reduced investments.

While a minority completely exited, 6% of the surveyed companies have scaled back their market engagement.

The research also examined how businesses are perceiving and capitalising on the opportunities presented by India, taking into account the recent shifts in commercial and geopolitical strategies.

From FY18 to FY23, India's estimated global share in workforce has increased from 22.4% to 24.9% in mean percentage terms, while revenue share has risen from 14.8% to 15.8%. These figures demonstrate incremental growth for India on the global stage during this period.

As per the study, a larger proportion of manufacturing companies, in comparison to service-based companies, has chosen India, Vietnam or Thailand as their alternative to China.

This trend suggests that many businesses are actively considering the necessity of derisking their supply chains. Over 80% of the surveyed services companies said their recent expansion of Indian operations was influenced to some extent by considerations related to a China-plus strategy. Industrial companies show a lower percentage, with over 37% potentially more drawn to alternative geographical locations. When asked about their strategic options regarding off-shoring, re-shoring, friendshoring, or near-shoring, survey respondents indicated a slight preference for offshoring. About 45% of the companies have either already implemented or are seriously considering offshoring as their preferred choice, surpassing other alternatives.

However, even those that did choose India indicated infrastructure, regulation and skill-related issues as serious challenges. The study identified the increasing popularity of friend-shoring as a result of the global shift away from multilateral trade towards bilateral trade relations. The rise of "deglobalisation", protectionism, and nationalism has created an environment where countries prioritise working with partners with existing friendly bilateral ties rather than relying on global or regional trade agreements.