Melissa & Doug was in trouble. For decades, the American toy brand had relied heavily on Chinese factories to make its products, from wooden puzzles to stuffed animals to play mats. Suddenly, that approach seemed risky.

It was February 2021, and the world was besieged by a pandemic. Lockdowns had disrupted production at Chinese factories. Trade hostilities between Washington and Beijing were undermining the benefits of relying on Chinese factories. President Trump had imposed tariffs on a wide range of Chinese imports, raising prices, and President Biden had extended the policy.

Melissa & Doug was eager to move some production to other countries, which led its chief supply chain officer to the factory in Greater Noida, a fast-growing city about 30 miles southeast of India’s capital, New Delhi.

The factory belongs to a family-owned company called Sunlord. Marissa & Douglas executives were surprised to find that the factory could produce high-quality wooden toys at prices comparable to those of Chinese factories. At the end of last year, Sunlord completed its first batch of products for Marissa & Douglas, which was a small order of about 10,000 pieces, and now it is 25,000 pieces per month.

“They want to put 20% to 30% of their production in India,” said Amitabh Kharbandar, head of Sunlord. “There is a lot of positive energy in India right now.”

India is showing signs it could become a vital place to make products as volatile forces — notably hostility between China and the United States — reshape global markets. Multinational brands that for decades relied on Chinese factories are expanding into India as they look to limit the vulnerability of concentrating production in any single country.

A shift to India would make global supply chains more resilient and less vulnerable to shocks, and it would also boost development in India, which missed out on the manufacturing boom that lifted hundreds of millions of people out of poverty in East Asia — first in Japan, South Korea and Taiwan, then in China and, more recently, in Thailand, Indonesia and Vietnam.

While India has about 1 billion working-age people, there are only 430 million jobs in the country, according to the Centre for Monitoring Indian Economy, an independent research group in Mumbai. And most of those employed are day laborers and farmers, leading extremely precarious lives. Growing exports could bring new jobs, especially for women, who have been largely excluded from the formal workforce.

India’s manufacturing sector is still in its infancy and fragile. In its nearly 80 years as an independent country, India has been hobbled by a sclerotic bureaucracy, a passion for self-sufficiency and a disdain for international trade.

Prime Minister Narendra Modi has changed that perception, winning praise from business leaders for streamlining regulations and supporting industry. But that has resulted in more rhetoric than jobs: Manufacturing now accounts for just 13% of India’s economy, lower than when Modi took office a decade ago. His authoritarian tendencies and demonization of India’s Muslim minority have stoked doubts about his leadership and threatened to provoke social conflict that would undermine India’s appeal.

Modi’s disappointing performance in recent national elections has created even greater uncertainty. After losing its parliamentary majority, his Hindu nationalist party was forced to form alliances to maintain power, a wild card for future governance.

Despite a major effort to build ports and highways over the past decade, basic infrastructure remains incomplete, posing challenges to the transportation of raw materials and finished goods. Even those in India’s manufacturing sector doubt whether the country can handle rapid growth.

American brands “see the strength of India,” said Kailesh Shah, managing director of All Time Plastics, which runs a kitchenware factory north of Mumbai. But American companies are so dependent on Chinese industry that even small shifts can have big consequences.

“Even if 5% of the production is cancelled, it will fill up the factories in India,” Shah said.

China remains a powerful country with the technology and infrastructure to mass-produce almost anything at low cost.

This is not the first time that there have been claims around the world that India is finally on the verge of seizing its destiny as a manufacturing power. Previously, the rhetoric failed to translate into reality. But this time, India’s mission is aided by geopolitical realities.

Last year, 40% of American companies doing business in China in a survey conducted by the American Chamber of Commerce in Shanghai said they were moving or planning to move planned investments to other countries because of tensions between Washington and Beijing.

Most companies have set their sights on Southeast Asia. Mexico has a particular advantage, taking advantage of its proximity to the United States and trade agreements to secure more orders. But these countries are not yet comparable to China, which limits the amount of business they can absorb. In addition, they are still heavily dependent on Chinese industries for key components and raw materials.

India’s unique advantage is its 1.4 billion population, making it a more populous country than China. From cotton to iron ore to chemicals, India has abundant raw materials and the potential to develop its own supply chain. If any country could one day replicate China’s role in manufacturing, India may have the greatest chance.

These characteristics explain why the world’s largest retailerWalmartIt is actively expanding its purchases from Indian suppliers, with the goal of increasing purchases from about $3 billion in 2020 to $10 billion by 2027. Apple is also moving more and more iPhones toManufacturing BusinessDelivered to Indian factory

“I don’t think American companies will invest in China in the future,” said Amitabh Kant, a senior government official close to Modi. “All these companies are moving production to India. It’s a great opportunity to create jobs.”

European companies have similar tendencies.

“We are too dependent on consumer goods produced in China,” said Uli Scheraus, managing director of TecPoint, a German retailer that sells steak knives, cutting boards and grilling accessories. “Everyone has learned the hard way that it is not advisable to rely on just one supplier for anything.”

India hopes the influx of multinational brands will extend its manufacturing bonanza beyond its south, where car factories and technology companies have sprung up.

At the center of that vision is Uttar Pradesh, India’s most populous state, long a byword for rural poverty. Suddenly, representatives of retailers from North America and Europe are flocking to look at possible factory sites.

“It’s a tantalizing possibility that could be a game changer,” said Arvind Subramanian, a former economic adviser to Modi’s government and now a senior fellow at the Peterson Institute for International Economics in Washington. “You have 225 million people there, a lot of unskilled labor, a growing young population. So if you did something there, in some sense it could be like China 40 years ago.”

In western Uttar Pradesh, Moradabad, a city of 1.3 million people, has long been a metal-forging industry. It sits on the banks of the Ramganga River, whose banks are made of sand that is particularly useful for forging techniques.

This skill has recently attracted the attention of companies such as Walmart.

“Walmart’s sourcing efforts are focused on ensuring we maintain broad diversity in both existing and new suppliers, including small companies and entrepreneurs from around the world,” Walmart spokeswoman Blair Cromwell said in a statement. “This strategy creates redundancy in our supply chain and reduces reliance on any single market or supplier.”

On a recent afternoon at a factory called Shri Krishna, a family-owned business, hundreds of workers wielded machines that transformed coils of steel and piles of wood into products — cutting boards, cocktail shakers, ladles — that are needed in kitchens from Barcelona to Boston.

A half-dozen workers performed a kind of industrial magic, dipping a stainless steel ring bracket into a bubbling green chemical bath that turned it copper. Others pushed chunks of metal onto spinning stone balls, sparks flying off the sides as the balls smoothed out imperfections. Downstairs, men fed planks of wood into whirring saws, filling the air with sawdust.

It was 41 degrees Celsius and the windows were open to let the breeze in. The ceiling fan was humming and there were no plans to buy air conditioning.

“We are used to it,” said Samish Jain, who heads marketing for Shree Krishna.

Jain, 35, paused at a workbench where men were using cloths to wipe dust off wooden cake stands at Walmart USA. He said the American brand had previously purchased these products in small quantities from his factory.

“It’s a big order,” he added. “More than $2 million.”

Jain’s father and his two brothers started out making stainless steel kettles and mugs for the domestic market, and by the mid-1990s they were exporting, supplying mixing bowls and colanders to the U.S. market.

Today, the founder’s four sons play an active role in the company, including Jain, who was educated at a graduate business school in Florence, Italy, and favors stylish glasses and designer shirts. While his father preferred to speak Hindi, Jain speaks English fluently and has traveled the globe expertly.

Shri Krishna has been producing for Walmart for more than 20 years. But in recent months, Walmart has seen a surge in interest in the factory, with buyers from its Bangalore and Hong Kong offices recently visiting the plant. The Jains hope to expand the business 10 or even 20 times in the next five years.

“Walmart doesn’t want to put all its eggs in the China basket,” Jain said. “They think India is the only country where they can achieve the scale they have achieved in China.”

He also said part of their appeal to Walmart was that all the wood needed for the factory was harvested in India, including mango and acacia. 95% of the steel was purchased domestically, although it also imports machinery from Chinese producers.

The company, which recently acquired a textile mill about 50 km west of Moradabad, plans to increase the number of sewing machines from 350 to 1,200 within two years and produce T-shirts and sportswear, with nearly two-thirds of its output to be exported.

The site includes a vacant lot large enough to accommodate several jumbo jets, which is space for expansion to produce metal products.

“Whatever we want to do, we can do it here,” Jain said. “Once that’s done, Walmart will be able to move production from China to India.”

Perhaps the biggest obstacle to achieving this vision is the state of unreliable infrastructure.

“The electricity never goes out,” boasted Jain’s father, Sandeep, as he sat in the air-conditioned factory conference room. “It has never gone out since Modi came to power.”

Seconds later, the air conditioner screeched to a halt and the lights went out.

In recent months, Samish Jain has been traveling more than usual.

In April, he visited Walmart’s headquarters in Bentonville, Arkansas, lugging a travel bag full of samples to show the company’s buyers.

He spent three days wandering around the Inspired Home Show, a convention center in downtown Chicago packed with 10,000 attendees, meeting with representatives of kitchenware brands from the United States, Europe and Australia.

Many worry that U.S.-China relations could become more hostile, hindering business development – especially if Trump is returned to the White House in November’s election.

“If Trump gets elected again, he’ll finish what he started,” said Dov Shiffrin, a representative for Yukon Glory, which makes grilling accessories in China.

“India is the wave of the future,” he said. “They’re going to be the next China.”