India as the rising giant in the supply chain industry: Emerging opportunities and challenges

Key industries driving India’s supply chain growth include information technology, pharmaceuticals, textiles, and automotive. (Image/Reuters)

– By Anshum Jain

India Review remarks, “India is emerging as a reliable alternate destination for manufacturers and supply chain diversification due to its large labour and consumer base, low operating costs, and linkages to important international markets.” Confirming this statement are the countries across the world who recognise the exemplary role that India is playing in increasing flexibility in costs and lead times in supply chain management. Estimated at USD 3,421.17 million in 2023, the India Supply Chain Management (SCM) market is driven by several key factors such as its growing economy, strategic location, and welcoming business environment. The market is projected to expand at a compound annual growth rate (CAGR) of 11.1%, reaching USD 6,433.24 million by 2030.

Key industries driving India’s supply chain growth include information technology, pharmaceuticals, textiles, and automotive. These sectors contribute significantly to the economy and create a strong demand for efficient supply chain solutions. When it comes down to considering just the IT-BPM sector, it becomes fascinating to realise that it alone accounted for 7.5 per cent of the GDP in the fiscal year 2023. Many crucial forces drive India’s socio-economic growth which holds promise as a key driver of the nation’s modernisation.

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India’s Supply Chain Future Brightens with Abundant Skilled Labor and Government Support

One of the main reasons for India’s growing prominence in the supply chain industry is its steady supply of skilled labour. As estimated by consulting firm EY, India is expected to house 1 billion working-age adults by 2030. This signifies that about a quarter of the world’s new workforce over the next decade will originate from India. For India, this represents an opportunity to capitalize on what analysts refer to as a “demographic dividend.” This occurs when the economy accelerates due to a larger proportion of working-age individuals compared to dependents, such as young children and the elderly.

The Indian government has also played a crucial role in boosting the supply chain sector. Several initiatives and incentives have been introduced to attract foreign investment and improve infrastructure. For instance, the Make in India campaign encourages manufacturing in India while the Goods and Services Tax (GST) has simplified the tax structure. This makes it easier for businesses to operate across state borders.

Global challenges in the supply chain sector and how is India providing solutions

By 2025, the Indian economy will have grown substantially, leading to a more diverse consumer base. This presents organizations with new opportunities and challenges. Global issues such as trade tensions, geopolitical risks, and the aftermath of the COVID-19 pandemic have disrupted supply chains worldwide. However, India is tackling these problems with innovative solutions. The country is investing heavily in technology to improve supply chain transparency and resilience. Efforts are being made to diversify trade partnerships to reduce dependency on any single country.

India’s infrastructure still needs significant upgrades to meet global standards. The government is addressing this by investing in transportation networks, ports, and warehousing facilities. These improvements are essential to support the growing demand and ensure the smooth movement of goods within the country and beyond. Organizations will need to integrate scenario-based planning and budgeting for small investments to experiment and develop new capabilities, preparing for future challenges.

Conclusion

India’s supply chain and logistics sector stands among the largest globally and is poised for significant expansion. The sector holds immense potential to grow exponentially. Indian workforce is capable of handling complex operations which makes India a reliable partner for global companies. To position itself as a global leader, India must bridge the competitiveness gap of USD 180 billion compared to advanced nations’ supply chains effectively. This is only possible if India capitalises on opportunities and implements effective strategies that advance its position in the global supply chain ecosystem, driving significant growth in the SCM sector.

(Anshum Jain is the Vice President – Global Supply Chain, Greater India at Schneider Electric.)

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