Latest major events in Asia, such as US-China trade war and coronavirus outbreak, has taught the world not to centralize supply chain only in China. Vietnam and Mexico has become good backups to supply chains in China, but will India also be one of them?
For the past years, imports from China to Asian trade partners and international trade partners such as the US have been consistently declining. Even worse, the coronavirus outbreak nearly incapacitating imports from China as the country suffers much from it.
The lack of imports results in domino effects, halting raw materials distribution. This suspension further causes industries all over the world, including manufacturing, delay and stop operations.
Reshoring Index, an annual report by global consulting firm Kearney, indicated that 14 Asian low-cost countries have declining manufacturing industries. This is partly due to decreasing manufacturing imports from China.
Considering the condition, companies begin to seek for other supply chains in outside of China. As companies start to select countries that meet the criteria, India potentially becomes one of them.
Also Read: IMF: Asia Economic Growth to Halt This Year
Will India be Another Copy of China?
With imports from China continually decline over the years, countries throughout the globe opt other countries for solving the problems, The decentralization will provide benefits in the future should economic clashes occur again.
Western countries such as the US and Canada have chosen Mexico, while Asian and other countries start to migrate to Vietnam. These two countries qualify to be “China’s doubles” because of similar productivity between them.
However, another option rises to be the another double of China, which is India. Besides being a low-cost country for production with a number of workers available, India has other promising factors.
For instance, Total Economy Database reported that, since 2003, workers’ outputs per hour in India has significantly increased. This, additionally, indicates that the productivity rates consistently escalates each year.
