India’s service sector can also be a winner, including in information and communications technology, financial and professional services, and transport and logistics. In the coming years, India is likely to raise its 1.5% share of world exports of intermediate goods. The WTO ranked India as the world’s fifth-largest importer of intermediate goods in the fourth quarter of 2022 with a 5% share. Manufacturing sectors in India such as automotives, pharmaceuticals and electronics assembly are already sophisticated and likely to emerge as winners in this race. Vietnam and Thailand have been bigger winners in supply chain shifting than India so far.īut over time, India too can become a complementary Asian manufacturing hub to China by reaping gains from foreign technology transfers and creating value-adding jobs. Southeast Asia has beckoned foreign companies with cheap wages, fiscal incentives and improved logistics. Nonetheless, profitability considerations are influencing a trend of relocating production either to friendly countries or back to the U.S. It is costly to shift supply chains, and most multinationals cannot afford to undertake a wholesale relocation of production from China. The downturn, coupled with rising labor costs in China and the country’s trade war with the U.S., is forcing multinational companies to rethink their global sourcing strategies. Shipments from the U.S., which accounted for 8.1% of world exports of intermediate goods, fell 3% while those of Japan, with 4%, fell by 13%. The global risks of supply chains concentrated in mainland China and Hong Kong are underlined by recent World Trade Organization data.Įxports from the two markets, which together represent 20% of world exports of intermediate goods, decreased 15% and 27% year-on-year, respectively, during the last quarter of 2022. But now China-centric global supply chains, which brought prosperity to East Asia, are being disrupted by multiple global shocks including geopolitical tensions, strike threats and weather-related disasters. It is one of the world’s fastest-growing economies, with a low-cost, trainable workforce, a middle class with an estimated 250 million consumers and growing openness to trade and investment.Ī similar scenario made China an attractive supply chain hub over time.

India’s large economy is poised to take advantage of this development. exchanges, or how American venture investment group Sequoia Capital has spun off its Chinese funds.

Consider the delisting of Chinese companies from U.S. The initiative seeks in part to decouple global supply chains from China and promote more global sourcing from trusted supplier economies.ĭecoupling is already becoming visible in flows of capital and technology. The country is a key target of the Indo-Pacific Economic Framework launched by the Biden administration. India’s new attractiveness is linked to both geopolitical and economic factors. Recent eye-catching investments in India for the production of Apple’s iPhone 14 and the Mercedes-Benz EQS electric luxury sedan suggest that supply chain pessimism about the country has started to fade since the pandemic. as central to new supply chains and its inclusion in the shift of existing ones away from China. President Joe Biden, as well as the e-commerce investments promised by, are indicative of how India is being considered by the U.S.

The agreements on defense and critical technologies signed by Modi and U.S. work together on semiconductors and critical minerals, it helps the world in making supply chains more diverse, resilient and reliable,” Indian Prime Minister Narendra Modi said in his address to a joint session of the U.S. Supply chains are at the center of the latest chapter in India-U.S.

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