For American Brands Worried About China, Is India the Future?

As multinational retailers diminish their dependence on Chinese factories, some are shifting production to India.

Melissa & Doug had a situation. For decades, the American toy brand had leaned heavily on factories in China to make its products — wooden puzzles, stuffed animals, play mats. Suddenly, that course looked risky.

It was February 2021, and the world was besieged by a pandemic. Lockdowns disrupted Chinese factories. Trade hostilities between Washington and Beijing were undermining the benefits of depending on plants in China. President Donald J. Trump had slapped tariffs on a broad variety of Chinese imports, increasing their prices, and President Biden extended that policy.

Melissa & Doug was eager to shift some production to other countries. Which explained the arrival of its chief supply chain officer at a factory in Greater Noida, a fast-growing city about 30 miles southeast of the Indian capital, New Delhi.

The factory was owned by a family business called Sunlord. The Melissa & Doug executive was surprised to see that the plant could make high-quality wooden toys, at prices comparable to those in China. Late last year, Sunlord completed its first batch of products for Melissa & Doug, a modest order of about 10,000 items, and now is cranking out 25,000 per month.

“What they want is 20 to 30 percent of their production being done in India,” said Sunlord’s director, Amitabh Kharbanda. “India has a lot of positive vibes right now.”

In a global marketplace reshaped by volatile forces — not least the animosity between the United States and China — India shows signs of emerging as a potentially significant place to manufacture products. Multinational brands that have for decades relied on Chinese factories are expanding to India as they seek to limit the vulnerabilities of concentrating production in any single country.