In the last five years, India has emerged as a great manufacturing success in the global arena as per a study by Boston Consulting Group (BCG), quoted in an Economic Times report.
According to the BCG report titled ‘Harnessing the Tectonic Shifts in Global Manufacturing,’, Indian exports to the US surged by $23 billion, which means there was a 44% increase from 2018 to 2022. However, China on the other hand has experienced a 10% drop in its exports to the US which is not good news for the world’s number two economy.
The study by BCG has focused on the transformation in manufacturing and sourcing across various industries based on its analyses of trade disputes, the covid pandemic, geopolitical tensions, and supply chain disruptions. That has led many global companies to reconsider their manufacturing and sourcing strategies, and India is fast emerging as a destination where one can experience uninterrupted supply chain management.
As per the study conducted by BCG, the average cost of Indian-made goods imported into the US is 15% lower compared to goods manufactured in the US. This calculation is based on factory wages, productivity, logistics, tariffs, and energy use. However, Chinese goods offer only a 4% cost advantage over US-made products and are 21% more expensive when subject to US tariffs related to the trade war.
But the most interesting development is the semiconductor and material shipments from India to the US. With the problem looming large over the China-Taiwan, Indian semiconductor manufacturing saw a remarkable 143% increase over the past five years, even though it was from a modest base. Meanwhile, China’s exports in semiconductors decreased by 29%. The other sectors that saw an increase in exports to the US are the auto components by 65%, and mechanical machinery exports grew by 70%.
Ravi Srivastava, the global leader of BCG’s operations practice speaking to NDTV said, “India is in a strong position to emerge as a strategic export platform for many global markets in the years ahead across a range of industries and has particularly benefited from significant shifts away from China as an export platform for the US.”
What is even more interesting and a worrying trend for China, more than 90% of North American manufacturing executives surveyed by the leading consultancy company said that they have moved some of their production and sourcing to different countries over the past five years—and they will continue to do the same for the next five years.
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