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China finally has a rival as the world's factory floor, India: Report

Western companies are desperately looking for a backup to China as the world's factory floor, a strategy widely termed "China plus one."

India is making a concerted push to be the plus one. Only India has a labour force and an internal market comparable in size to China's. India's population may be the world's largest, according to the United Nations, Wall Street Journal reported.

Western governments see democratic India as a natural partner, and the Indian government has pushed to make the business environment more friendly than in the past.

It scored a coup with the decision by Apple to significantly expand iPhone production in India, including expediting the manufacturing of its most advanced model. Signs that India is changing are visible in the sprawling industrial parks in Sriperumbudur, a city in the southern state of Tamil Nadu, WSJ reported.

Foreign manufacturers here have long churned out cars and appliances for the Indian market. They're now being joined by multinational corporations making goods from solar panels and wind turbines to toys and footwear, all looking for an alternative to China.

In 2021 Denmark's Vestas, one of the world's largest wind-turbine manufacturers, built two new factories in Sriperumbudur. Its six assembly lines now assemble hub cells, power trains and other components, stacked high in a storage yard to be shipped across the world, WSJ reported.

Forecasts that India would soon become the second-largest market for turbines sparked Vestas's expansion. But it was also a conscious effort to diversify away from China, which hosted the bulk of its regional production, especially after repeated lockdowns under Beijing's zero-Covid policy, said Charles McCall, who oversaw the expansion as senior director of Vestas Assembly India.

"We don't want all our eggs in one basket in China," he said.

Some of Vestas's suppliers have joined it. American contract manufacturer TPI Composites moulds 260-foot-long turbine blades that regularly draw attention as they are shuttled along surrounding highways. It has expanded significantly in India even as it reduces operations in China.

Eventually, 85 per cent of Vestas's suppliers will be in India, said McCall, who recently left the company.

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