India may find itself in a favourable position amid rising geopolitical and economic tensions—particularly due to the United States’ fresh tariff regime targeting China. According to Prashant Khemka, founder of White Oak Capital Management, this shift is set to benefit India, especially in sectors where labour cost plays a significant role, such as garmenting, low-end engineering goods, and select ancillary manufacturing.

Labour-Intensive Sectors Could Lead the Way

Khemka highlights that India has natural advantages in areas where manual or low-skilled labour is a major cost factor. For instance, garment manufacturing, which demands extensive human labour, is unlikely to be relocated to the US, given the high cost of domestic production there. India, with its large workforce and competitive wages, is well-positioned to absorb this shift.

“It would be difficult to make such products onshore in the US anytime soon,” said Khemka.

Engineering goods and basic ancillaries—especially those not requiring high-end automation—are also sectors where India could step in as a reliable supplier, replacing Chinese firms affected by tariff hikes.

Global Supply Chain Realignment Favouring India

The broader story is one of a global supply chain churn, triggered by US-China tensions. With tariffs rising and trade restrictions tightening, manufacturers and global brands are actively seeking alternatives to China. For years, India lagged behind Southeast Asian countries in attracting this manufacturing shift. However, with the tariff-induced urgency, India now finds itself more competitive.

“Where India was at a disadvantage compared to some of these other countries, it would become more competitive,” Khemka observed.

This realignment may not just be about cheap labour, but also about policy incentives, ease of doing business, and infrastructure upgrades, where India has made visible progress.

IT Services: Caution Amid Indirect Pressures

While the immediate focus is on manufacturing, Khemka cautions about indirect effects on India's IT services industry. Since around 40% of Indian IT business is linked to the US, any slowdown in the US economy or corporate earnings could result in tightening of tech budgets.

“If there's a slowdown in corporate earnings and banking in the US—it will constrain IT spending,” he explained.

Although tariffs don't directly target digital services, the ripple effects of reduced enterprise spending could be felt across consulting, software services, and digital transformation projects outsourced to Indian firms.

Capital-Intensive Sectors May Not Benefit

Khemka draws a line when it comes to capital-intensive sectors, such as automobile manufacturing, where automation plays a huge role. These industries might actually re-shore to the US, especially with the aid of high-tech robotics and limited human input.

“A highly automated automobile plant is more likely to move back onshore. That’s not an area India plays in,” Khemka said.

This observation underlines that India’s strength lies in labour-driven output, and not in sectors dominated by large-scale automation and advanced robotics.

India’s Defence Potential in a Reconfigured World Order

Interestingly, Khemka also views India’s defence sector as a possible beneficiary of changing geopolitical dynamics. With Donald Trump signaling reduced US commitment to NATO and allies, countries like Germany and Japan are expected to ramp up their own defence capabilities.

“What Trump has made clear to Europe is: you are on your own,” he noted.

While India may not yet be producing cutting-edge military technology, it can still supply competitively priced arms and ammunition, which are increasingly in demand as nations prepare to bolster their security infrastructure.

“There could be arms and ammunition, where India is very capable of producing competitively,” he said.

This highlights India’s long-term strategic potential in global defence supply chains, particularly in segments where it can scale production at lower costs.

Conclusion: A Moment of Opportunity and Caution

In summary, the new tariff regime enforced by the US against China is more than a trade war—it’s a pivot point for countries like India. The redistribution of supply chains, the search for affordable labour markets, and changing defence alliances present India with tangible opportunities.

However, Khemka also signals a need for caution. Not all sectors will benefit equally, and India must continue to invest in manufacturing readiness, policy clarity, and upskilling its workforce to truly capitalize on these shifts.

As India positions itself as a new node in the global supply chain, its performance in labour-intensive manufacturing, IT services resilience, and defence exports will be the key markers to watch in the coming years.

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