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India: The Emerging Global Supply Chain Hub

December 03, 2024 7 min read
author Anamika Mishra [Sub Editor]
India has shown immense potential in the last few years by looking at its capability to become a credible player in the global supply chain ecosystem. Visionary government policies, strategic global partnerships, and self-endowed factors such as a large workforce and cost-effective manufacturing with a fast-growing domestic market are all power behind this drive. The change is particularly clear in areas such as semiconductors and manufacturing, where India is beginning to create a very significant position at the nexus of global supply chains. Government Led Initiatives: Laying the Foundation India's government has initiated a series of ambitious initiatives in the direction of strengthening the countries' supply chain capabilities. Expanded, the Production Linked Incentive (PLI) scheme that provides financial incentives to firms as an incentive towards improving their production levels in specific sectors. The scheme is to propel several more industries into that of electronics, pharmaceuticals, and even automobiles toward global giants. Smartphone production has been soaring in India from Apple and Samsung. The other crucial scheme is dubbed Making India, an initiative to make India a global manufacturing superpower. One such program, initiated in 2014, makes it possible for manufacturing in India of all bases, domestic and foreign companies, to be as close to being competitive with the authority that foreign companies have in characteristics. Over the years, this initiative has encouraged large investments in special categories such as defense, electronics, and renewable energy. Indeed, the Indian Semiconductor Mission will form the backbone of India's dreams and ambitions in the semiconductor space to become a global hub. By earmarking a fund of nearly $10 billion for semiconductor manufacturing technology design, India has attracted investments from leading companies like Vedanta Foxconn and Micron Technology. Among other things, this mission seeks to build local competencies through cooperation with countries such as the United States, Japan, and Taiwan for access to technology transfer and critical raw materials. Building Infrastructure for a Resilient Supply Chain To make an efficient supply chain possible, strong infrastructure is mandatory; therefore, India has made considerable investments in the logistics network. This development consists of dedicated freight corridors, modernization of ports, and expansion of highways and railways. Projects like the Delhi Mumbai Industrial Corridor (DMIC) will change the face of goods transportation and eventually result in cost reductions and lower transit times. India's digital infrastructure plays a huge role too. The introduction of the Goods and Services Tax (GST) has been paving away from having a simplified taxation system in the country thereby lowering logistical inefficiency. National Logistics Policy aims to bring down logistics costs from 14% of India's GDP into single digits, bringing India in line with global initiatives. The efforts would certainly have an effect on the domestic supply chains and possibly place India as a promising alternative in international trade routes. Semiconductors: A Strategic Focus In essence, semiconductors are the backbone of modern technology today. Everything from smartphones to electric vehicles has some part or altogether semiconductor components in its production. That is strategically why India is now developing its semiconductor ecosystem. The Semiconductor Mission includes both its manufacturing and design, harnessing India’s capability as a global hub for chip design engineers. Indian engineers contribute close to 20% to the global semiconductor design workforce. Global partnerships were significant in taking the country's semiconductor ambitions forward. Collaborations made with world's leading semiconductor nations such as Taiwan and the U.S. enabled the country to gain exposure and access to the cutting-edge technologies. The proposed establishment of semiconductor fabs and packaging units by Vedanta Foxconn underscores India's potentiality towards emerging as a global semiconductor hub by 2030. Sustainability and Technological Integration Sustainability was an ever-consuming concern among the global supply chains and India has already duly complied with it. The nation

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