The next few months could see the emergence of a US-led economic and security alliance that would replace the current international system. US negotiations with individual countries will be as much about a push for balanced trade as about a joint commitment to limit China’s reach in their respective markets.

In addition to reworking the US-Mexico-Canada Agreement, the Trump administration has prioritised negotiations with partners such as the UK, Australia, Japan, South Korea, Vietnam and India. Among these countries, Vietnam has the most unbalanced trade with the US as its exports are 10 times greater than its imports. Vietnam is also being actively courted by Chinese President Xi Jinping, as evident from his recent trip.

While the European Union (EU) is still on the sidelines, it is likely to join the alliance as it is aware of the dumping threat from China, illustrated by the invasion of State-subsidised electric vehicles. The EU is well aware that access to an open US market is more valuable than an unpredictable China market.

India is best positioned to accommodate global supply chains as they shift away from China. India and the US signed this Tuesday the terms of reference for the first phase of the trade deal, so that a preliminary deal is signed before the 10% tariffs roll out on July 4. The momentum will need to be sustained if, as agreed, both countries are to more than double bilateral trade to $500 billion by 2030.

The stance of the Trump administration has sent a clear signal to American companies — pack up your bags and leave China. And shifting into Vietnam, Thailand or Malaysia may not offer risk mitigation as these countries often risk being branded as transshipment hubs for China. For strategic sectors, Trump wants US companies to set up manufacturing in America. For all other sectors — especially labour-intensive ones that cannot be reshored — India is the best option.

Apple is the big success story of American foreign direct investment in India. For two decades, China has been the heart of Apple’s supply chain. Noting its over-dependence on China, Apple decided to make India a base for iPhone manufacturing. In a matter of months, myths about India’s lacklustre manufacturing environment have been shattered — Apple has ramped up to $22 billion production value of iPhones, with almost 50 factories in the supply chain, productivity levels matching China and two lakh direct jobs. With the China tariffs, this could potentially double to $44 billion in 18 months, creating India’s largest manufacturing enterprise.

However, this boost to Indian manufacturing will not emerge in a vacuum. The government must do its share by further simplifying procedures, extending incentive schemes such as PLI to offset cost disabilities, and being nimble in decision-making to stay ahead of potential competitors such as Mexico, Vietnam and Indonesia which could aggressively woo American companies as well.

Key manufacturing states too must step up with reform, rolling out the red carpet for American manufacturing giants seeking to relocate from China. Incremental reform will no longer be adequate, we will need to take decisive measures.

Many American companies derive a significant portion of their revenues from the China market and will need to maintain a manufacturing base there. Nike is a good example. Nike has already diversified its footwear manufacturing — 50% from Vietnam, 27% from Indonesia and 18% from China. This is perhaps the model, going forward, for American companies in China — keep a toehold manufacturing presence so as to maintain market access.

For US companies that have low market presence in China, the decision is easier. Walmart and Amazon are good examples. For both of them, China is a major sourcing hub. Given the right nudge, this sourcing could pivot to India at warp speed, providing a major opportunity for Indian MSMEs to supply to these platforms.

India is the hub for Global Capability Centres (GCCs). We have managed to attract most of the Fortune 2000 companies to make India an extension of their global headquarters for not just back office but core capabilities. Close to 1,200 US-headquartered companies have their GCCs in India and state governments are chasing many more.

A similar focus is required for manufacturing. Up to a hundred American companies can create millions of manufacturing jobs if they pivot production or sourcing to India.

The government has done a phenomenal job in attracting Apple to India — one million jobs will be created in that ecosystem by 2027. Nike and other footwear brands could potentially add another million. Walmart and Amazon sourcing could together scale to over $50 billion and create millions of jobs. If we can be agile and swift, the opportunity is ours for the taking.

Let us proactively target leading anchor firms from America as they leave China — Walmart, Target, Home Depot, Target, Nike, Gap, Dell, HP and many more. This is India’s moment to aspire to add 50 million manufacturing jobs in a decade while improving productivity and wages. Officials need to be convinced to walk the extra mile to facilitate the growth of manufacturing. Likewise, we need to convince our entrepreneurs to invest in the supply chains. We must all come together as Team India to win, whatever it takes.

Ashish Dhawan is founder-CEO and Sharat Chander is director, Policy and Partnerships, The Convergence Foundation. The views expressed are personal