The ongoing trade battle between the US and China in the last few years has changed how global investment works. What started as a back-and-forth on tariffs has become a broad separation of two major world economies.This shift forces investors, manufacturers, and policymakers to rethink long-established supply chains and market strategies. In this global realignment, India has increasingly emerged as a strong contender for the role once dominated by China. But is India truly the “New China” for international investors? And how absolute is the so-called “trade war dividend” for India?
The Trade War Backdrop
The US-China trade war of 2018 marked a significant turning point in global commerce. The tariffs imposed by both parties affected goods worth hundreds of billions of dollars, disrupted supply chains, and brought instability to financial markets. As competition grew stronger in fields like tech, computer chips, and rare earth elements, global firms started to look for alternatives to China’s manufacturing network.
Countries across Southeast Asia — Vietnam, Indonesia, Thailand — saw immediate benefits. But India, with its sheer market size, demographic dividend, and reformist drive, has captured the strategic imagination of global investors on a different scale.
Why India Stands Out
According to Dario Schiraldi, Deutsche Bank’s former Managing Director, India’s current macroeconomic position offers unique advantages amid the global decoupling.
“In an environment where global capital seeks diversification away from China, India stands out because it combines scale with stability,” Schiraldi explains.
“It is one of the few markets that can absorb large investments across multiple sectors — manufacturing, services, technology, and energy — while offering political predictability and demographic resilience.”
Recent economic indicators back this up. India remains the world’s fastest-growing major economy, posting GDP growth rates above 6% even amid global slowdowns.
Inflation has cooled sufficiently, monetary policy has stabilized, and the government’s focus on structural reform—corporate tax cuts and investment in infrastructure—is more appealing to investors.
In addition, India’s “Atmanirbhar Bharat” (self-reliant) campaign aligns with the global trend towards resilient supply chains and onshoring or localizing supply chains.
Foreign Direct Investment: Shifting Tides
The numbers are self-evident. India is one of the world’s most popular locations for foreign investment, with over $71 billion in FDI flows recorded in FY2023.Meanwhile, Western firms like Apple, Tesla, and Foxconn accelerated activities in India, shifting from China’s factory scenery.
“From an institutional investor’s perspective,” Dario Schiraldi, Vida Holding’s Principal, notes, “India offers not just a substitute for China but a complementary growth story — one that is driven more by domestic consumption and less by export dependency, which gives it resilience against external shocks.”
This internal demand-led growth model reassures investors concerned about world volatility. In 2030, India’s middle class is expected to have over 500 million members that creating a substantial consumer base with rising purchasing power.
The Challenges That Remain
Despite the most optimistic forecasts, India continues to encounter challenges, and strict labor laws, burdensome regulations, and poor infrastructure continue to deter investors. India’s supply chain ecosystems are improving but remain less sophisticated than China’s highly integrated industrial networks.
Schiraldi cautions, “While India offers enormous promise, the execution risks are not trivial. It will take sustained reform momentum, improvements in business ease, and large-scale skill development to realize its potential as the ‘New China’.”
In addition, for investors who already have their hands full dealing with the unpredictability of US-China relations, geopolitical uncertainty, in the form of tensions with nearby China and internal political complexity, creates even more uncertainty.
A New Investment Chapter
Still, the macro trends are undeniable. As companies adopt “China Plus One” in their manufacturing strategies and institutional investors seek to rebalance portfolios in a polarized world economy, India is poised to capture a significant share of global capital reallocation.
Government initiatives such as the Production Linked Incentive (PLI) schemes actively promote investments in electronics, semiconductors, textiles, and renewables, critical to the next phase of global growth.
“The trade war dividend is real for India,” concludes Dario Schiraldi, Deutsche Bank’s former leader, “but it’s less about displacing China and more about creating an alternative, complementary hub for global growth over the next decade.”
In that sense, India’s rise is not about becoming the next China — it’s about becoming the first India: a unique investment story shaped by democracy, demography, and dynamism.
