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India triumphs in Global Manufacturing, BCG Study Reveals
Industry News- Sep 21,23
A BCG study titled 'Navigating the Transformative Shifts in Global Manufacturing’ revealed a remarkable surge of $23 billion in exports to the US, a staggering 44% increase from 2018 to 2022.
India's prowess in global manufacturing has shone brightly over the past five years, marked by a remarkable surge of $23 billion in exports to the US, a staggering 44% increase from 2018 to 2022. In stark contrast, China grappled with a 10% decline in its exports to the US during the same period, as revealed by a BCG study titled 'Navigating the Transformative Shifts in Global Manufacturing.'
The study underscores that this transformative shift in manufacturing and sourcing dynamics transcended various industries, compelling global corporations to reimagine their manufacturing and sourcing strategies in response to trade disputes, the pandemic, geopolitical tensions, and supply chain bottlenecks. Amidst this strategic realignment, India firmly established itself as a favoured manufacturing destination.
The export of semiconductors and materials from India to the US witnessed an astounding 143% surge over the past half-decade, albeit starting from a modest base. Meanwhile, China faced a 29% decrease in such exports. Indian auto component exports to the US registered a robust 65% increase, while mechanical machinery exports surged by an impressive 70%.
Ravi Srivastava, global leader of the operations practice at BCG, remarked, "For the last two decades, we have frequently heard discussions about India's manufacturing potential, often accompanied by lingering doubts. Now, it appears that many pieces of the puzzle have fallen into place. What distinguishes this study is its comprehensive perspective, not only delving into the reshaping of global supply chains but also validating the evolving narrative of India as a manufacturing hub."
According to the study, India enjoys a significant advantage in terms of direct manufacturing costs as an export hub. BCG's calculations reveal that the average landed cost of Indian-made goods imported into the US, factoring in factory wages adjusted for productivity, logistics, tariffs, and energy, is 15% lower than the equivalent cost if the goods were produced in the US. In contrast, the average US landed cost for goods sourced from China is only 4% lower than domestic US production costs and 21% higher for goods subject to US tariffs related to trade disputes.
Looking ahead, BCG identifies a clear opportunity to further accelerate India's growth trajectory as a strategic manufacturing and sourcing destination. However, the decision to integrate India into corporate strategies hinges on a complex interplay of factors, with no one-size-fits-all solution.
Source: Indiatimes
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