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Mumbai: India has emerged as one of the winners in global manufacturing over the past five years, with its exports to the US surging by $23 billion, a 44% increase from 2018 to 2022, while China experienced a 10% decline in exports to the US during this period, according to a BCG study on global manufacturing shifts.
The study, titled 'Harnessing the Tectonic Shifts in Global Manufacturing', said the shifts in manufacturing and sourcing occurred in a range of industries as global companies have had to rethink their manufacturing and sourcing strategies due to trade wars, the pandemic, geopolitical tensions and supply bottlenecks. And as companies reconfigured strategies, India became one of the preferred manufacturing spots.
Semiconductor and material shipments from India to the US surged by 143% over the past five years, albeit from a modest starting point, while China saw a 29% decrease in these exports. Exports of Indian auto components to the US increased by 65%, and mechanical machinery exports grew by 70%.
"For the past two decades, we have heard talk of India's potential in manufacturing, often with a lingering question mark. Now, it seems that many pieces of the puzzle are falling into place. What sets this study apart is its comprehensive perspective, not only delving into the reconfiguration of global supply chains but also providing validation to the growing narrative of India as a manufacturing hub," said Ravi Srivastava, global leader, operations practice, BCG.
According to the study, India enjoys a strong advantage in direct manufacturing costs as an export platform. As per BCG's calculations, the average landed cost of Indian-made goods imported into the US, including factory wages adjusted for productivity, logistics, tariffs and energy, is 15% lower than if the goods are made in the US. By contrast, the average US landed cost from China is only 4% lower than US costs and 21% higher for goods subject to US tariffs related to the trade war.
Looking ahead, BCG sees a clear opportunity to further accelerate the growth trajectory as a strategic manufacturing and sourcing spot, but the decision to choose India's role in firms' strategies depends on a complex interplay of factors, and there isn't a one-size-fits-all answer
India winning global manufacturing battle, BCG report shows impact of supply chains shifting away from China
India has emerged as a winner in global manufacturing, with its exports to the US increasing by $23 billion, a 44% rise from 2018 to 2022. In contrast, China experienced a 10% decline in exports to the US during the same period. This shift in manufacturing and sourcing occurred due to trade...
