India winning global manufacturing battle, BCG report shows impact of supply chains shifting away from China

Mumbai: India has emerged as one of many winners in world manufacturing over the previous 5 years, with its exports to the US surging by $23 billion, a 44% enhance from 2018 to 2022, whereas China skilled a ten% decline in exports to the US throughout this era, in keeping with a BCG examine on world manufacturing shifts.

The examine, titled ‘Harnessing the Tectonic Shifts in International Manufacturing’, stated the shifts in manufacturing and sourcing occurred in a spread of industries as world corporations have needed to rethink their manufacturing and sourcing methods as a result of commerce wars, the pandemic, geopolitical tensions and provide bottlenecks. And as corporations reconfigured methods, India turned one of many most well-liked manufacturing spots.

Semiconductor and materials shipments from India to the US surged by 143% over the previous 5 years, albeit from a modest place to begin, whereas China noticed a 29% lower in these exports. Exports of Indian auto parts to the US elevated by 65%, and mechanical equipment exports grew by 70%.

“For the previous twenty years, we now have heard discuss of India’s potential in manufacturing, typically with a lingering query mark. Now, plainly many items of the puzzle are falling into place. What units this examine aside is its complete perspective, not solely delving into the reconfiguration of world provide chains but additionally offering validation to the rising narrative of India as a producing hub,” stated Ravi Srivastava, world chief, operations apply, BCG.

In response to the examine, India enjoys a powerful benefit in direct manufacturing prices as an export platform. As per BCG’s calculations, the common landed price of Indian-made items imported into the US, together with manufacturing facility wages adjusted for productiveness, logistics, tariffs and vitality, is 15% decrease than if the products are made within the US. In contrast, the common US landed price from China is just 4% decrease than US prices and 21% larger for items topic to US tariffs associated to the commerce struggle.Trying forward, BCG sees a transparent alternative to additional speed up the expansion trajectory as a strategic manufacturing and sourcing spot, however the choice to decide on India’s function in companies’ methods is dependent upon a posh interaction of things, and there is not a one-size-fits-all reply.