New Delhi, June 1, 2025 — In a significant shift in global manufacturing dynamics, India has officially overtaken China to become the most cost-effective manufacturing destination in the world, according to the latest international data on industrial competitiveness and cost analysis.
The new report highlights that India, long touted as a fast-rising alternative to China, has now secured the top spot due to its lower labor costs, increasing production efficiency, and supportive government reforms under the "Make in India" initiative. The study, conducted by global consultancy experts, analyzed several factors including wages, logistics, energy costs, taxation, and regulatory support.
Key Highlights:
India is now the cheapest country in the world for manufacturing, as per the 2025 Global Manufacturing Competitiveness Index.
China, which has held the top spot for nearly two decades, has now slipped to second place due to rising labor costs and geopolitical uncertainties.
Countries like Vietnam, Mexico, and Indonesia follow closely behind in third, fourth, and fifth positions, respectively.
Experts believe India’s edge lies not only in lower operational costs but also in its fast-growing domestic market, youthful workforce, and increasing investment in infrastructure and technology. The Indian government has also introduced favorable tax regimes and simplified compliance processes to attract more foreign direct investment (FDI).
Industry Reaction:
Industrialists and trade analysts welcomed the report as validation of India's growing stature in the global supply chain. “This is a proud moment for Indian manufacturing. It reinforces our position as the next global factory,” said Rajiv Malhotra, Chairperson of the Indian Chamber of Commerce.
Meanwhile, Chinese officials have downplayed the report, asserting that China still leads in terms of high-end manufacturing, export volumes, and technological integration. However, experts say the shift indicates a broader trend of companies diversifying away from China amid trade tensions and looking to India as a strategic alternative.
Global Implications:
With India becoming the most affordable manufacturing hub, global companies across sectors such as electronics, textiles, automobiles, and pharmaceuticals are expected to ramp up their investments in the country. Major players including Apple, Samsung, and Foxconn have already expanded their production bases in India in recent years.
As the global economy undergoes a transformation driven by supply chain diversification, India’s new ranking places it at the forefront of industrial growth and job creation for the coming decade.
