India: The next global sourcing destination?

The article viewpoints on how the Indian manufacturing sector has the opportunity to rise to prominence globally, positioning the country as a creditable supplier of high-quality goods and a reliable business partner for international organisations.

- Ruediger Schroeder

In the last two years, we have seen many disruptions in the global economy, partly because of the pandemic and partly for the Ukraine war, which has severely impacted the international supply chains. Due to supply chain issues and political challenges, companies are looking for alternative sourcing destinations to China (China plus one), and India is one of the promising alternatives here.

Reshaping the supply chain world

The opportunities created by these changes in the global supply chain post-COVID put India “on a pedestal” with great fanfare for the potentially strong growth opportunities that come with the size of the economy and the existing manufacturing and service industry base.

As the global supply chains are reshaping, this is providing a window of opportunity for India, but at the same time, India faces strong competition from South-East Asian as well as east European countries.

India ready to take the challenge

India has some work to do to fulfil its potential as companies still see many hurdles, despite the governments' initiatives to make life easier for foreign investments. Just to highlight a few:

• Ease of doing business (yes India has improved but still ranks more to the bottom than to the top)

• On-going bureaucratic and administrative challenges

• Infrastructure is still poor (especially in industrial areas)

– A lot has been invested and planned, but with a country so large there is a lot to do

• Power cuts have continued to be a challenge