Global trade is slowly recovering from the ill effects of the COVID-19 pandemic. Key global sourcing hubs are struggling to establish or retain their dominance. Though India is also fighting against multiple challenges posed by the pandemic, no one can deny the long-term growth trajectory and potential of the country. Many countries have confronted an economic downturn since the outbreak of the virus. India’s position fell from 5th to 6th in Global GDP rankings. This ranking is still of utmost importance as the country held 14th rank in 1995 while reaching 2020, it achieved the 6th position.
As India is the 6th largest economy across the globe with a GDP of USD 2.71tn in 2020, it already has a global identity as a strong supply market. According to the experts, it is going to be the 3rd largest economy by 2025. In 2020, only the US received 18% of total exports done by India. Though the largest portion of exports in 2020 was occupied by metals and minerals, India’s sourcing of transport goods grew at a CAGR of 16.5% during the 2001 to 2020 session. These statistics are indicators of India’s stable economy. This stable and growing economy is the pillar of its sourcing. In recent years, India has gained immense popularity as a reliable low cost country for sourcing. In FY21, India achieved a total foreign direct investment or FDI flow of around USD 81.72 billion.
Reasons behind the Emergence of Indian Sourcing
Over the last few years, India has witnessed a remarkable upsurge in sourcing. The abundance of raw materials, availability of skilled manpower, affordable labor costs, enhanced infrastructure, robust technologies, and supportive government initiatives are the main forces that drive the growth of India sourcing.
Discussed below are some of the key advantages of sourcing in India:
1. Low labor costs
Cost-effectiveness is one of the biggest advantages of India. Here, the labor cost is cheaper than in other countries. Therefore, many Europe and USA-based companies are inclining toward India for sourcing their required products at affordable prices.
2. An abundance of raw materials
Being known for its low cost country sourcing, a wide range of raw materials is easily available in India. This country is one of the largest producers of several raw materials. Also, it is rich in natural resources.
3. Prosperous export industry
Liberalization of several Indian trade laws and policies and government support have greatly encouraged the export sector. According to several reports, India’s export garnered USD 291.80 billion in FY 2020-2021.
4. Availability of infrastructure and latest technologies
India has shown remarkable progress in the field of technology. The improved infrastructure of India sourcing is inspiring global leaders to consider this low cost country sourcing. The deployment of robust technologies has further escalated the expansion of sourcing in India.
5. Political stability and flexible government policies
Companies always look for a sourcing hub where they can run their operations without any political unrest or obstacles. India is known for its peaceful environment and political stability. Additionally, supportive government policies are catching maximum attention of foreign companies to India sourcing.
Bottom Line
For the aforementioned reasons, nowadays India is counted as one of the leading sourcing hubs. However, you need to choose the right partner for India sourcing.