The domestic and foreign policies of both the United States and China are increasingly influenced by an intensifying rivalry between the two powers. Technology lies at the heart of this competition, with the ongoing “tech war” reframing economic and technological interdependence as a potential national security liability. This represents a clear shift from previous U.S. policy toward China, which, since the Clinton administration, had emphasized economic cooperation. From a realist perspective, this change reflects the broader power transition brought about by China’s rise on the global stage.
The strategic realignment of the U.S. technology industry is deeply rooted in Washington’s evolving stance toward China. The shift toward a more competitive policy framework on Beijing began to take shape during the final years of the Obama administration and was further intensified under the Trump and Biden presidencies. Initially, Obama-era narratives emphasized cooperation and mutual benefit through technological collaboration and economic interdependence.
However, mounting concerns over cyber espionage, the Chinese assertive industrial policies, and growing geopolitical tensions led to a narrative shift. As a result, China increasingly came to be seen not as a partner but as a strategic and systemic competitor, being regarded as a “peer adversary” in emerging technologies. Over time, what was once a cooperative relationship grounded in shared prosperity evolved into a competitive and security-driven posture, laying the groundwork for the current U.S.-China “tech war”. As the American government shifts its strategy, it’s also actively pursuing new partnerships to safeguard its technological leadership and to secure vital supply chains.[1]
As these geopolitical tensions escalate, strategic shifts in global supply chains by U.S. tech companies point to a deeper realignment within the global economic order. This insight examines the key forces driving U.S. multinationals to seek alternative partners under the China+1 strategy,[2] shedding light on how geopolitical dynamics are shaping such high-stakes corporate decisions. This strategy focuses on expanding manufacturing operations beyond China to reduce risks and take advantage of opportunities in other regions. As companies face increasing costs, geopolitical tensions, and supply chain challenges, the China+1 approach is becoming more widespread and is gaining further traction following Donald Trump’s recent re-election. With China’s central role in global manufacturing facing mounting scrutiny, attention is turning to India, prompting a critical question: can it emerge as a viable alternative after nearly two decades of Chinese dominance?
U.S. strategic disengagement from China
From cooperation to caution: the shifting dynamics
One of Washington’s core concerns regarding China lies in the country’s state-driven approach to technological development. Since the early 2000s, and especially after a detailed U.S. trade report[3] in 2018, the United States has accused China of engaging in unfair trade practices to gain technological superiority, including price manipulation, political leverage, and intellectual property theft. According to American policymakers, China routinely pressures foreign companies seeking market access to form joint ventures with local firms. These arrangements often lead to forced technology transfers, where Chinese companies obtain critical know-how through legal coercion or undervalued transactions. Once Chinese firms acquire the targeted technology, they replicate it and eventually push their foreign partners out of the market.
Security risks linked to China’s role in global tech supply chains
Beyond economic implications, these practices have raised serious national security concerns. U.S. officials fear that Chinese high-tech companies operating in the U.S. could be compelled under Chinese law to collect sensitive data and transmit it to Beijing. While no confirmed cases have been made public, the binding nature of China’s national intelligence laws amplifies perceived risks, especially around 5G infrastructure and other critical technologies.[4]
Considering these developments, and amid growing frustration among global markets, Western governments have recognized the dangers of overdependence on Chinese supply chains. These concerns, spanning economic resilience, fair competition, and national security, have prompted the United States and several allies to adopt de-risking strategies. As a result, many are relocating parts or, in some cases, the entirety of their production outside of China.[5]
Implications of China’s technology transfer practices for multinationals
China’s opaque technology transfer practices remain a major concern for U.S. firms, particularly those in high-tech industries prioritized by the Chinese government. Confidential business surveys highlight consistent reports of U.S. companies being directly or indirectly pressured to transfer technology or intellectual property as a condition for market access. This issue has proven to be widespread, with firms in key strategic sectors, such as aerospace, automotive, chemicals, and information technology, experiencing significant pressure.
Similar concerns have been raised by European companies, which identify mandatory technology transfers and joint venture requirements as major obstacles to investing in the Chinese market.[6] As Isaac Stone Fish, CEO and Founder of Strategy Risks, asserts, “decoupling from China is a necessity,” since the risks of engagement now outweigh the benefits.
This issue is also recognized by China’s allies, who express growing concerns over its risky approach. Russia, in particular, views China’s behavior in military technology transfers as untrustworthy and opportunistic. Despite close ties, China’s focus on developing its own technology leads to frequent intellectual property pilferage and misuse, causing Russia to limit cooperation and withhold sensitive technologies.[7]
India as an alternative
How realistically can India replace China as the primary manufacturing hub for global tech companies?
India has emerged as a strategic partner for global technology firms, offering substantial scale, growing digital capabilities, and increasing political alignment with the West. As American tech companies rethink their global operations to manage risk and reduce reliance on China, India is taking on a more central role in these realignment strategies.
Although it may not fully replace the “Asian giant” as the world’s manufacturing hub in the near term, India is increasingly viewed as a credible alternative. Its young and expanding labor force, competitive wage structure, rising foreign direct investment (FDI), and reform-oriented governance are creating the conditions for a large-scale industrial expansion. A full displacement of China is not a prerequisite for a potential Indian success, because even a modest shift of global manufacturing would have a transformative economic impact, signaling a significant evolution in India’s position within global supply chains. Notably, this transition is already in motion.[8]
Strategic drivers of the U.S.-India partnership
For decades, U.S. policymakers have regarded India as a natural ally, not only because it is the world’s largest democracy but also due to its sustained economic growth, technological advancement, and expanding global influence. In recent years, India’s strategic concerns over China’s assertive actions in the Indo-Pacific have increasingly aligned with U.S. interests, strengthening bilateral cooperation aimed at deterring Beijing’s zero-sum approach under President Xi Jinping.
This convergence has been reinforced by major bipartisan initiatives, such as the Bush-Singh Civil Nuclear Agreement and the more recent Biden-Modi collaboration on critical technologies, including artificial intelligence, biotechnology, and aerospace. India’s rapidly expanding digital economy and its ambitions to become a global technology exporter have further reshaped the U.S.-India technology partnership over the past decade, positioning the two countries as key partners in shaping the future of the global technological order.[9]
To underscore the growing strength of this strategic partnership, India’s Minister for Electronics and IT, Ashwini Vaishnaw, clarified that the country’s electronics sector remains unaffected by the recent U.S. tariffs. His remarks came after the United States imposed a 25% tariff on select Indian goods and introduced penalties linked to India’s imports from Russia, yet notably, electronics were exempt.
India’s electronics exports surged by 47% year-on-year in Q1 FY26, fueled by a remarkable 240% increase in smartphone shipments to the U.S., which now make up 44% of American smartphone imports. Vaishnaw also highlighted ongoing efforts to reduce India’s dependence on Chinese rare earth magnets, reflecting a broader strategy to strengthen the country’s role in advanced technologies.
These developments align with the U.S.’s intent to deepen ties with India as a critical partner in countering China, particularly in strategic sectors such as semiconductors, artificial intelligence, digital infrastructure, and resilient supply chains.[10]
What’s powering India’s rise as a hub for U.S. tech investment?
With a blend of rapid economic momentum, a thriving digital ecosystem, and a government actively courting global capital, India is fast becoming a prime destination for U.S. tech investment. Below are ten compelling reasons why the country is capturing the attention of international tech giants:
1. Rapid Economic Growth
With a projected GDP growth rate between 6.3% and 6.8% for FY 2025-26, India remains the fastest-growing major economy, offering long-term stability for investors in sectors such as manufacturing and construction.
2. Rising Private Consumption
A growing middle class is expected to account for 75% of national consumer spending by 2030, with total consumption projected to reach US$5.2 trillion by 2031.
3. Demographic Dividend
India’s young and expanding workforce (65% of the population aged between 15 and 64) offers a large, skilled labor pool with a median age of just 28.4 years. By 2036, India is expected to have the highest proportion of young people in its population.
4. Supportive Government Policies
Initiatives like Make in India, Digital India, and the Production-Linked Incentive (PLI) Scheme aim to simplify regulations, improve infrastructure, and boost domestic manufacturing across key sectors.
- Make in India: Launched in 2014, the program aims to offer simplified regulations, tax incentives, and subsidies to both domestic and international manufacturers to boost local production. It targets key sectors such as defense, automobiles, biotechnology, and electronics.
- Digital India: Launched in 2015, the program seeks to create a digitally empowered economy by strengthening internet infrastructure and connectivity nationwide. In 2022-23, India’s digital economy contributed 11.74% to the national GDP, totaling US$402 billion.
5. Expanding Industries
While traditional sectors like services and manufacturing remain strong, emerging areas such as electric mobility, FinTech, MedTech, and renewable energy are drawing new waves of investment.
6. Strategic Geographic Location
Positioned centrally in Asia, India connects supply chains across South Asia, the Middle East, and Africa, serving as a key gateway to a vast consumer market of 3.2 billion people and boosting its importance in global trade logistics.
7. Infrastructure Development
A robust network of roads, railways, ports, and Special Economic Zones (SEZs), along with initiatives like PM Gati Shakti and Bharatmala, enhances India’s manufacturing and export capabilities.
8. Digital Transformation
With over 900 million internet users and a booming digital economy, India is a leading player in online markets, e-commerce, digital payments (UPI), and tech-driven innovation.
9. Export Incentives
Government schemes such as RoDTEP, MAI, and EPCG support exporters through duty reimbursements, infrastructure upgrades, and access to global markets.
10. Liberalized FDI Regime
Most sectors now allow 100% FDI under the automatic route, with ongoing reforms expanding access in areas like telecom, defense, digital media, and e-commerce.
Together, these factors position India as a high-potential, tech-friendly, and strategically vital destination for U.S. companies seeking growth in the Indo-Pacific region.
Examples of U.S. Tech Investment in India
In 2021, Amazon launched its first device manufacturing line in India to produce hundreds of thousands of Fire TV Stick units annually at a Chennai plant, in partnership with Foxconn’s subsidiary, Cloud Network Technology. This initiative supports India’s “Make in India” and Atmanirbhar Bharat campaigns, aligning with the government’s vision for self-reliance and boosting domestic production. Amazon plans to invest US$1 billion to digitize 10 million small and medium businesses and create 1 million jobs by 2025. India’s Electronics and IT Minister, Ravi Shankar Prasad, welcomed the move, emphasizing it as a strategic step to enhance India’s role in global supply chains and promote exports. The initiative underscores the United States’ strategic push to deepen economic ties with India amid broader geopolitical shifts.[11]
In 2025, eight venture capital and private equity firms from the United States and India—including Celesta Capital, Accel, Blume Ventures, and Premji Invest—have launched the India Deep Tech Investment Alliance, committing over US$1 billion to support early-stage Indian deep tech startups over the next 5 to 10 years. Backed by the Indian government’s US$11 billion Research, Development, and Innovation (RDI) scheme, the alliance will offer funding, mentorship, and market access, focusing on seed to Series B rounds in emerging “sunrise” sectors. More members may join, but all must comply with RDI requirements. This formal collaboration signals deeper U.S.-India tech ties despite ongoing geopolitical tensions.[12]
Apple is expanding its retail footprint in India with new stores opened in Bengaluru and Pune in September 2024, building on its 2023 launches in Mumbai and Delhi. This move reflects more than just geographical growth; it highlights Apple’s evolving strategy in a rapidly growing premium tech market. At the same time, Apple is working to reduce its reliance on China for U.S.-bound production, aiming to mitigate risks from escalating trade tensions. With the Trump administration imposing steep tariffs on Chinese goods and criticizing U.S. firms for China dependency, Apple is strategically diversifying both its retail and supply chain operations.[13]
Jacobs Solutions, a technical professional services firm, is expanding rapidly in India’s semiconductor and electronics sectors, with key projects including the US$20 billion Tata Electronics fab in Dholera, Gujarat. The company sees strong demand for related infrastructure—tool suppliers, specialty gases, and advanced manufacturing. India’s multi-phase investment incentives and skilled workforce, trained on global fab projects, support this growth. Jacobs’ India team can scale from hundreds to 1,600 engineers, with major offices in Bengaluru and other cities, enabling global delivery.[14]
The rising risks to the U.S.-India strategic partnership
Is the U.S.-India partnership facing a turning point?
Recent developments, including disagreements over tariffs, India’s continued purchase of Russian oil, and renewed tensions surrounding Pakistan, have strained U.S.-India relations. Public exchanges between officials have further escalated this downturn, threatening one of the most promising bilateral relationships in U.S. foreign policy. As both nations reassess their positions, it is important to reflect on why India has become a key U.S. partner and how to preserve and strengthen this alignment moving forward.
Donald Trump’s senior trade advisor, Peter Navarro, has stirred worries of a potential digital tariff war after endorsing a call to tax outsourcing and foreign remote work. The idea, originally posted on 1 September 2025 by activist Jack Posobiec, argued that services provided remotely to the United States should be taxed just like imported goods, with tariffs adjusted by country and sector. Navarro’s support immediately raised concerns that Trump’s campaign may pursue tariffs on India’s US$283‑billion IT outsourcing industry, which relies heavily on U.S. contracts. Anxiety grew further when commentator Laura Loomer suggested on 5 September 2025 that Trump might even ban American companies from outsourcing to Indian firms.
For Indian tech professionals, both those based at home and those working on assignments in the United States, these signals fuel uncertainty about future opportunities. They suggest that outsourcing could shift from being a routine business model to a contested political issue in America’s election debate.[15]
The insufficiency of the current partnership model and the need for a more adaptive approach
Despite this progress, the relationship has historically lacked a formal security guarantee, making it less of a priority in U.S. foreign policy compared to traditional alliances. The post-Cold War focus on collective defense has overlooked other vital pillars of strategic partnership, like technology cooperation, education, and economic interdependence, which are increasingly relevant in today’s geopolitical environment.
This oversight now poses a risk. As India engages more visibly with Russia and China, evident in Narendra Modi’s recent meeting with Xi Jinping and Vladimir Putin on the sidelines of the Shanghai Cooperation Organization’s summit in Tianjin, the possibility of India drifting from the U.S. orbit becomes more realistic. Without deeper integration, both countries could lose a valuable opportunity to counterbalance authoritarian powers and shape global norms.
The path to stronger U.S.-India strategic ties
Rather than restoring the status quo, Washington and New Delhi must work toward building a more ambitious and comprehensive strategic alliance. This should include new forms of cooperation on technology, defense, supply chain security, intelligence sharing, and global problem-solving, without necessarily requiring a traditional mutual defense pact.
The foundation for this exists. Now is the time to build upon it. Failure to act could not only weaken U.S.-India relations but also push India toward deeper engagement with geopolitical rivals, undermining long-term American interests in Asia and beyond.[16]
Conclusion
The strategic realignment of the U.S. technology industry toward India marks a pivotal shift in the global economic and geopolitical landscape. Driven by the deepening U.S.-China rivalry, concerns over national security, and the growing vulnerabilities of overdependence on Chinese supply chains, American tech firms are recalibrating their global strategies. This transformation signals not merely a tactical adjustment but a structural evolution in the global tech ecosystem, as Washington redefines its alliances in pursuit of long-term resilience and strategic autonomy.
At the heart of this shift lies a re-evaluation of China’s role in global technology supply chains. Once seen as a cornerstone of global manufacturing, China is now increasingly viewed through a lens of risk, primarily due to its state-driven economic model, coercive technology transfer practices, and opaque regulatory environment. For U.S. firms, these factors have transformed China from a reliable partner into a strategic liability, raising both economic and security concerns. This has accelerated the adoption of the “China+1” strategy, which seeks to diversify operations and mitigate geopolitical risk.
India has emerged as a promising alternative. Its large and youthful workforce, growing digital infrastructure, policy reforms, and strong alignment with U.S. geopolitical interests make it a compelling destination for global technology investment. While India cannot fully replace China in the short term, its increasing integration into global supply chains signifies a rebalancing of power within the Indo-Pacific. Real-world investments from U.S. tech giants like Apple, Amazon, and Jacobs Solutions, along with deep tech partnerships and venture capital flows, underscore India’s rising strategic relevance.
However, the U.S.-India partnership is not without its challenges. Divergences on trade, foreign policy alignments, and the absence of a formal security framework continue to test the depth of the relationship. For this realignment to yield lasting outcomes, both countries must move beyond transactional cooperation and invest in a long-term strategic framework. This should encompass joint innovation, digital governance, resilient supply chains, and enhanced technological collaboration.
In the broader context of global innovation and economic dynamics, this shift reflects more than geopolitical hedging. It is indicative of a world in transition where technological leadership, national security, and economic sovereignty are increasingly interlinked. As the United States seeks to retain its edge in emerging technologies, its evolving partnership with India could redefine the architecture of global tech production and shape the contours of 21st– century economic power.
[1] Ingvild Bode, Cecilia Ducci, and Pak K. Lee, “Narrating and Practising the US–China “Tech War,”” Global Studies Quarterly 5, no. 2, April 12, 2025, https://doi.org/10.1093/isagsq/ksaf037
[2] “China+1 strategy: Diversifying manufacturing beyond China’s borders,” Acclime, November 29, 2024. https://tinyurl.com/4brrjxn9.
[3] U.S. International Trade Commission, The Year in Trade 2018: Operation of the Trade Agreements Program — 70th Report, Publication Number: 4986, October 2019, https://www.usitc.gov/publications/332/pub4986.pdf.
[4] Agathe Demarais, “How the U.S.‑Chinese Technology War Is Changing the World,” Foreign Policy, November 19, 2022,
[5] “The Growing Risk of Over Reliance on Chinese Export Manufacturing,” ITI Manufacturing, October 24, 2024, https://tinyurl.com/yydc7xj3.
[6] Office of the U.S. Trade Representative, Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974, March 22, 2018, https://tinyurl.com/muzfns6x.
[7] Elliot Ji, “Seller Beware: The Damage of Techno-Nationalism in Sino-Russia Military-Technological Cooperation,” Institute for Future Conflict, May 29, 2025, https://tinyurl.com/2xh9bsdy.
[8] Behind Asia, “Can India Replace China as the World’s Manufacturing Hub?” YouTube video, March 26, 2025,
[9] Kurt M. Campbell and Jake Sullivan, “The Case for a U.S. Alliance with India,” Foreign Affairs, September 4, 2025, https://tinyurl.com/27a95hfk.
[10] Rakesh Kumar, “India’s electronics sector unaffected by US tariffs for now: Union minister Ashwini Vaishnaw,” The New Indian Express, August 12, 2025, https://tinyurl.com/2s3dz9un.
[11] “Amazon is Setting Up Its First Device Manufacturing Line in India,” The Economic Times, February 17, 2021, https://tinyurl.com/ta848f55.
[12] “New $1 Billion Alliance Formed to Strengthen US-India Deep Tech Ties,” The Economic Times, September 3, 2025, https://tinyurl.com/494wjuf2.
[13] “Apple Said to Manufacture All iPhone 17 Models in India,” The Economic Times, August 20, 2025, https://tinyurl.com/yc7yfb4w.
[14] Dia Rekhi, “India Is Long Term a Good Place for Us to Invest: Jacobs’ Vadlamudi,” The Economic Times, September 4, 2025, https://tinyurl.com/4u39taj2.
[15] “US may slap tariffs on IT service exports: Which Indian tech jobs are at risk and who could gain?,” The Times of India, September 8, 2025, https://tinyurl.com/2dmj5bm7.
[16] Kurt M. Campbell and Jake Sullivan, “The Case for a U.S. Alliance with India.”
