Why is it in the news?

• India aims to become a significant player in global supply chains with the India-Middle East-Europe Economic Corridor (IMEC) announcement.

More about the news

• Supply chains involve the cost-effective distribution of production stages, from design to marketing and service activities, across geographical locations.
• Global supply chains have been dominant since the 1980s, influencing globalization and regionalization.
• Western firms began reducing their reliance on China before the pandemic due to various factors, including rising wages and regulatory concerns.
• Recent data shows a decline in exports from China and Hong Kong, prompting multinational companies to reconsider their sourcing strategies.
• India is viewed as an attractive supply chain hub due to factors like foreign technology transfers, value-added job creation, and geopolitical and economic considerations.
  • India’s emphasis on trade policy and preferential trade agreements, especially with Western partners, contributes to its attractiveness.
• India can learn from China’s experience by promoting export-oriented foreign direct investment (FDI), facilitating business investment, and reducing administrative hassles.
• Local companies should adopt smart business strategies, including partnering with larger exporters and investing in domestic technological capabilities.
• India can potentially promote industrialization in South Asia, benefiting the entire region through market-led spillovers and policy initiatives.
• Initiatives like the Make in South Asia Program and comprehensive bilateral FTAs with neighboring countries can support regional supply chains and economic growth.