The Viyug

By Harshit Tokas

India’s role in the global supply chain landscape is taking centre stage as supply chain dynamics undergo significant shifts. These changes are driven by factors such as the de-risking strategies of Western firms, the post-pandemic reevaluation of supply chain resilience, and the emergence of alternative manufacturing hubs. India is positioning itself as a critical player in these evolving supply chain dynamics, aided by key developments such as the India-Middle-East Europe Economic Corridor (IMEC) and investments by major global companies. This article explores the factors behind India’s growing importance in global supply chains, the challenges it faces, and the strategies that can help it harness this potential.

Supply chains, often often described as global production networks or global value chains, refer to the network of stages in the production process, from design to assembly, that are geographically dispersed in a cost-effective manner. Over the past few decades, global supply chains have transformed industrial production and reshaped the dynamics of globalisation and regionalisation.

China’s dominance in global supply chains has faced challenges in recent years. Western firms initiated de-risking strategies to reduce reliance on China, driven by factors such as rising labor costs, supply chain bottlenecks within China, and concerns about tighter foreign firm regulation.

India is emerging as an attractive supply chain hub for several reasons. Southeast Asian countries like Vietnam and Thailand have gained attention for their cost-effective labor and improved logistics, but India offers distinct advantages. Apple’s increased manufacturing of iPhones and Mercedes-Benz’s early technology transfer for the EQS electric sedan in India demonstrate a growing confidence in the country’s supply chain capabilities.