As India inches towards its aspiration of becoming the world’s manufacturing powerhouse, recent developments between the US and China threaten to derail these ambitions. Just last week, the trade landscape shifted dramatically with the announcement of a 'reset' in trade relations between Washington and Beijing.

In a stunning turn of events, tariffs imposed by Trump on China plummeted from an eye-watering 145% to a mere 30%, while India's tariffs linger at around 27%. This unexpected move could hinder India's potential to attract manufacturing investments that were previously shifting from China.

Ajay Srivastava from the Global Trade Research Institute expressed concern over the possibility that India's low-cost assembly lines might persevere, but the critical high-value growth could be jeopardized.

Just a month prior, optimism surged in India as tech giant Apple hinted at relocating a majority of its iPhone production from China to Indian shores. However, this positive sentiment faced a setback when President Trump advised Apple’s CEO against building operations in India due to its high tariffs.

Analysts like Shilan Shah from Capital Economics underscored that India still holds promise. With 40% of its exports to the US resembling those exported by China, India is poised to fill the void left by Chinese manufacturers. Indeed, recent surveys indicate a boost in new export orders, reaching a 14-year peak.

Furthermore, a report from Nomura highlights early anecdotal evidence of India's emerging role in benefitting from the ongoing shifts in global supply chains, particularly in the electronics and textiles sectors.

Despite the recent US-China trade overtures, some experts argue that a strategic decoupling between the two global powers will ultimately yield advantages for India. The Indian government appears more receptive to foreign investments after years of protectionist policies, potentially creating a conducive environment for international business.

India’s recent trade pact with the UK, which significantly reduces tariffs on key sectors, offers a glimpse into the concessions India might present during upcoming negotiations with the US.

However, optimism must be tempered. China remains a formidable competitor, and other Asian nations like Vietnam continue to capture investment attention, as noted by economists from Nomura. For India to seize this critical opportunity, it must implement significant reforms to enhance the ease of doing business.

Over the past two decades, India’s manufacturing sector has stagnated, contributing only around 15% to its GDP. Government initiatives like the Production Linked Incentive scheme have had limited success in altering this scenario.

The Niti Aayog has pointed out that India’s struggles in attracting manufacturing investments stem from structural issues that have favored countries like Vietnam and Malaysia, who offer lower tariffs and simpler tax regimes.

A critical challenge remains India’s reliance on China for essential raw materials and components, particularly in electronics. Srivastava argues that mere assembly of iPhones isn’t enough; a more profound commitment from companies like Apple to manufacture components locally is essential.

As it stands, Apple may reap over $450 for every iPhone sold in the US, while India nets a mere $25, raising questions about the real economic benefits of assembly operations.

Moreover, concerns persist over the potential for Chinese exporters to use India as a stealth route for products destined for the US, challenging India’s ambitions to build a robust industrial base.

Experts warn that despite high-profile announcements like Apple's, India still faces significant hurdles in achieving its factory ambitions. Economic advisor recommendations highlight the need for reductions in production costs, better logistics, and enhanced regulatory stability.

The recent US-China trade reset was merely a strategic move rather than a long-term solution. India must prioritize sustainable growth strategies or risk being sidelined in the global manufacturing narrative.