India's Pivotal Role in Global Supply Chains and its Challenges
India is poised to play a key role in global supply chain diversification amid trade wars and geopolitical tension, leveraging government support and its talent resources.
HR Policy Global’s Take: Global companies are actively seeking alternatives to China-centric supply chains and are increasingly drawn to India's strategic location and growing capabilities. However, they encounter challenges such as infrastructure gaps, a shortage of skilled labor, rigid labor laws, and ESG concerns.
Recognizing the opportunity amid global supply chain disruptions, India's government has implemented initiatives like "Make in India" and "Atmanirbhar Bharat" to boost foreign investments and enhance domestic production. The country can further enhance its role in supply chain diversification through several unique advantages:
By adopting AI, IoT, and automation, India is well positioned to transform its technology, service, and manufacturing sectors.
The country's strong trade relations with most of its trade partners and strategic partnerships with European and US partners smooth trade flows.
India provides a vast and diverse talent pool, especially in STEM fields, making it a major hub for tech talent and innovation. This attracts global companies for outsourcing and offshoring.
Challenges: While the potential is significant, India faces hurdles that must be addressed to replace China in global supply Chain.
Infrastructure gaps: Despite progress, challenges in logistics and transportation remain, impacting reliability.
Regulatory complexities: Navigating through India's regulatory employment and labor landscape can be daunting for multinational corporations. The government intended to push a labor reform to simplify and consolidate its labor laws, but they have delayed it for a couple of years.
Skilled labor shortage: High-value manufacturing needs a more skilled workforce. the lack of skilled workers limits India's ability to capitalize on the potential tariff advantages.
ESG concerns: As global supply chains shift to the country, there is increasing pressure to adopt ESG compliance, especially in high-polluting industries like textiles, chemicals, and mining.
The bottom line: India's strategic initiatives and positioning make it a formidable player in global supply chain diversification, but addressing challenges like infrastructure and skilled labor is crucial for sustained growth.
Wenchao Dong
Senior Director and Leader, HR Policy Global, HR Policy Association
Contact Wenchao Dong LinkedInMORE NEWS STORIES
Will India’s Manufacturing Resurgence Spark a Rise in Labour Disharmony?
Samsung India Workers Union Officially Recognised, Potentially Aiding Union Activities in the Region