India Rises as Global Supply Chain Realignment Leader
India is emerging as a major player in global supply chain realignments, benefiting from the US's reduced imports from China and tapping into new export markets. The Production-Linked Incentive schemes attract investments to boost domestic output, positioning India to seize large-scale trade opportunities with countries like the UK and EU.
- Country:
- India
India is rapidly positioning itself as a key beneficiary in the realignment of global supply chains, according to a comprehensive report from the Federation of Indian Chambers of Commerce and Industry (FICCI) along with the Boston Consulting Group (BCG). The report stresses the importance of not only maintaining scale and efficiency but also embracing resilience, adaptability, and compliance amid evolving trade patterns.
Amid a shift in global trade flows, India stands to gain immensely. The US has cut $150 billion in imports from China, directly resulting in $23 billion in new exports for India. The landscape of trade is transitioning from reliance on single countries to diverse multi-region networks. Trade bloc alliances like IPEF, BRICS+, and ASEAN are advocating nearshoring and friendshoring to decrease foreign dependency, reshaping regional dynamics to India's advantage.
India's modest export dependency offers a buffer against immediate tariff impacts. Initiatives like the Production-Linked Incentive scheme are drawing over $20 billion in investments, driving $191 billion in output across critical sectors such as electronics, IT, and pharmaceuticals. The opening of new trade corridors poses trillion-dollar prospects, bolstered by upcoming agreements like the India-UK Free Trade Agreement and potential India-EU partnerships. However, challenges remain with high import reliance for strategic sectors, reinforcing the urgency of building robust domestic value chains.
The report highlights the need for industries to localize inputs to fortify value chains. Rahul Jain of BCG emphasizes the transformation in trade norms, noting a shift towards complexity in design and execution. Meanwhile, Jyoti Vij from FICCI points out the dual nature of current global trends as both opportunities and challenges, underscoring the necessity for India to innovate in efficiency, resilience, and sustainability to command a transformative role in global trade.
(With inputs from agencies.)
Google News