China, known as the ‘World’s factory’ has been the center of global supply chains in the last few decades. In the last two years, changing geopolitics started this trend of diversifying the supply chain. COVID-19 escalated the adoption of this strategy. Now, this trend looks structural and persistent. Around 30% of global manufacturing ($4 tn) happens in China. A survey by UBS suggests that 20-30% of manufacturing will be leaving from China

India is the most likely candidate to benefit from this situation owing to its comp advantage in various industries. This shift is visible in results and discussion with various mgmts such as:

Specialty Chem: With a 35% market share in global exports, China is slowly losing momentum due to changes in trade dynamics, stringent environmental norms will help India to increase its global market share from 3% to 9% as expected in the coming decade due to growth in end-user markets and shutdown of plants(China)

Textiles: Consolidation in the supplier base, ban on cotton from Xinjiang by the US, decreasing market share of China are some of the factors leading to more exports from India owing to the abundance of raw materials and presence across the value chain

Electronic Mfg:Govt Initiatives towards import substitution augurs well for this sector to register an exp CAGR of 30% over the next five years

Sensing these opportunities, we have created a smallcase to play on this emerging structural theme catering to various Indian competitive sectors