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China+1 sourcing from India: what procurement teams get wrong

By Ben Tharakan · THX Ventures LLP · August 2026 · 5 min read

Every second enquiry we receive now mentions China+1. Good — the logic is sound and the shift is structural. But having sat on both sides of this trade (we import from China through our own corridors and export Indian goods to the buyers leaving it), I see the same four mistakes repeated by otherwise sharp procurement teams.

Mistake 1: treating India as one supplier

India is a continent of clusters. Tirupur does knitwear at world standard; Jalandhar and Meerut make a large share of the world's sporting goods; Rajkot machines components; Guntur grows the chillies. The gap between the best factory in a cluster and the average one is wider than in coastal China — which means supplier qualification is not a formality here, it is the whole job. Budget for audits, samples and a pilot order before you move a category.

Mistake 2: comparing ex-works prices instead of landed costs

India's FTA network changes the arithmetic. Since July 2026, ~99% of Indian lines enter the UK duty-free under CETA; the UAE, Oman, Australia and EFTA agreements are live; the EU deal is concluded and ratifying. A quotation that looks 3% dearer ex-works can be 8% cheaper landed once preferential duty is applied. Run the comparison at the landed line, with the certificate of origin priced in — we do this modelling as the first step of every programme.

Mistake 3: assuming the ecosystem is complete

It is not, and pretending otherwise wastes a year. In electronics especially, India assembles at scale but still imports many components — India's own imports from China ran to roughly US$113 billion in FY25. Map your bill of materials honestly: some inputs will localise now, some in three years, some not yet. The correct answer is often a phased programme, not a switch.

Mistake 4: flirting with origin shortcuts

Here is the paragraph that matters. China+1 must never mean routing Chinese goods through India with cosmetic processing. Rules of origin demand substantial transformation with real value addition, and customs authorities in the US, EU and India are prosecuting trans-shipment fraud aggressively. As a licensed customs house, we refuse this work on sight — and any partner who offers it is offering you their prosecution risk. The clean version of diversification is the only version with a future.

What a sound programme looks like

• Category feasibility in writing: supplier depth, landed-cost model (FTA route included), lead-time reality, rules-of-origin opinion — go, phase or no-go.
• Parallel qualification: two or three Indian suppliers proven alongside your incumbent before any volume moves.
• Pilot, then ramp: a trial container through a consolidation structure; scorecards each cycle; volume follows evidence.

Done this way, the +1 stops being a slide in a risk deck and becomes a supply pillar. Our full China+1 assessment framework is here — or send us a category and we will return the feasibility view.