India's China Plus One Strategy: Seizing Opportunities

The China Plus One strategy is a risk mitigation concept that businesses are adopting to diversify their manufacturing and sourcing strategies beyond China. The approach arose from the recognition of potential risks associated with over-reliance on a single country for manufacturing, such as supply chain disruptions, increasing labor costs, and geopolitical tensions.

Companies implementing China Plus One continue to operate in China but also establish manufacturing capabilities in alternative countries. This helps in reducing dependency on China and spreading out risks. India, with its large workforce, growing infrastructure, and supportive government policies like Make in India, is becoming a preferred alternative for companies exploring the China Plus One model.

The strategy not only secures the supply chain but also exploits the advantages offered by other countries, such as lower costs, access to new markets, or trade benefits. It's essentially about not putting all eggs in one basket, especially in a globalized economy where disruptions in one region can have worldwide implications.

Craftsman Automation, a key player in engineering supply for the automotive and industrial sectors, is leveraging the China+1 strategy and Make in India initiative by significantly increasing its investment for the fiscal year 2024. The company is set to invest an additional ₹150-160 crore, raising its capital expenditure to Rs.470-480 crore for the creation of a greenfield manufacturing unit in Coimbatore. This proactive move is aimed at capturing the market space created by shifting global supply chains and India's push for reduced import dependence.

The new manufacturing complex, earmarked for about Rs.209 crore, will be located near the company's existing Coimbatore plant, ensuring synergy between the two facilities.
The first half of the fiscal saw Craftsman Automation spend Rs.258 crore on upgrading technology and expanding current operations.
With a focus on the automotive powertrain business, the company anticipates growth in the coming years and is preparing to meet export demands and expand into the off-highway segment, leveraging current geopolitical dynamics.

Craftsman Automation is also expanding its aluminum die-casting and industrial engineering segments, expecting a brighter second half with a substantial order book in automated storage solutions.
This strategic expansion underscores the company's agility in adapting to global market shifts and India's potential as a manufacturing hub.