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India’s Supply Chain Opportunity

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.

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