Chennai: India has emerged as one of the biggest beneficiaries of the global diversification of manufacturing supply chains, with European companies sharply increasing investments in the country as businesses look beyond traditional production hubs, according to the latest UNCTAD analysis.The trend comes at a time when India and the European Union are working to conclude a long-awaited free trade agreement, providing a fresh boost to New Delhi’s efforts to position itself as Europe’s preferred manufacturing and investment partner.The changing geography of global manufacturing is creating new opportunities for economies that combine industrial scale, processing capacity, abundant resources and strategic market access, with India emerging as a central industrial base, the report said.The UNCTAD analysis shows that India has become the largest emerging-market destination for European Union investors in cross-border greenfield projects in materials and industrial manufacturing during 2021-2025, accounting for 35% of the value of the EU’s outward greenfield investments in the sector.More significantly, India’s share has risen by 26 percentage points compared with the 2015-2019 period—the biggest increase among the European Union’s top investment destinations—highlighting the country’s growing importance in global manufacturing networks.UNCTAD said one of the most significant shifts in global manufacturing investment over the past five years has been the growing flow of European Union investments into India. The country’s share of the EU’s manufacturing investments rose by 10 percentage points as European companies diversified their production bases in response to geopolitical risks and supply chain realignments.The findings come as multinational companies increasingly adopt a “China+1” strategy, seeking alternative manufacturing locations while building more resilient global supply chains.For the EU, India now ranks ahead of several established manufacturing destinations. The United States remains the largest recipient of EU manufacturing investments among developed economies, attracting 15% of investment value, while the EU itself accounted for 14%. Among emerging economies, however, India dominates with a 35% share, highlighting its growing attractiveness as a production base.Meanwhile, Chinese investors have increasingly shifted manufacturing investments towards Kazakhstan and Indonesia, while US companies have favoured Canada and Mexico as part of their regional supply-chain diversification strategies.
