India gaining in supply chain shift from China

New Delhi: More global companies are taking supply chain diversification seriously. Companies are increasingly highlighting the benefits of ‘friend-shoring’ their supply chains in order to better insulate from geo-political challenges.

“We see India, Mexico and Southeast Asia as best positioned for this transition. India and Mexico are two economies that stand to benefit from increasingly local supply chains,” Morgan Stanley said in a report. Morgan Stanley economists have written extensively on the economic and industrial benefits that are beginning to accrue in economies where supply chains are migrating.

“In India we see a tripling of the manufacturing base by 2031 with its share of GDP rising from about 16 per cent to 21 per cent over the same time horizon. In Mexico, we estimate a potential net gain of approximately 30 per cent in exports to the US over a period of five years; this trend appears to be well underway as Mexico-US trade is now level with China-US trade. The associated rise in investment and manufacturing could help raise Mexico’s potential GDP from 1.9 per cent to 2.4 per cent, over the next five years, according to our models,” the report said.