Speaking to ET, Nikolaus Lang, managing director & senior partner at BCG highlighted the Indian market as the biggest draw for investors amid a sweeping global realignment. He, however, stressed on sustained focus on infrastructure development, skilling and cost competitiveness for India to further enhance its manufacturing footprint on a global scale.
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Investor concerns about China are steering capital towards India and other Southeast Asian markets, according to industry experts. Greenfield FDI in Malaysia surged 125% to $140 billion in the five years to 2025, in Indonesia by 34% to $133 billion, Thailand by 97% to $56 billion. Greenfield FDI in Vietnam (-12%) and the Philippines (-24%) slipped in the period under review.
Lang said amid geopolitical uncertainties, multinationals are realigning supply chain strategies, moving from an era of sourcing everything from a single supplier and the cheapest possible suppliers to dual or triple sourcing.
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“So, from that perspective, I think India has a role to play because the industry is looking for alternative sources than the one source they used to have,” said Lang. For India to attract more industries, the country needs to mobilise capital, have a skilled workforce and put in place a demand stimulus. “If you don’t have adequate people being able to handle stamping, painting, assembly, mechatronics, and things like this, you will always struggle to localise,” said Lang. “And the third is to really have a demand stimulus… (so) if the local market is big enough, I think then it’s definitely something which is worthwhile.”
He said Southeast Asian countries like Philippines and Vietnam have benefitted from the ‘China Plus One’ strategy drawn out by multinational corporations in the aftermath of the pandemic.