Recent research highlights a notable shift among German medium-sized enterprises, as many are increasingly considering India as a pivotal player in their supply chain strategies. The study reveals that interest in India has risen, with 15 percent of companies now looking to expand their operations there, up from just over 10 percent in late 2022.
This growing interest is particularly strong among larger medium-sized firms, with approximately one in four planning to enhance their trade relationships with India. This marks a significant increase from about 15 percent a year ago. India’s impressive economic growth, registering around 7.7 percent in 2023, and its youthful, educated workforce contribute to its rising appeal.
India is particularly attractive for sectors like food, chemicals, plastics, metal, automotive, and mechanical engineering. This diversification reflects its expanding role in global supply chains.
At the same time, China is also reinforcing its position as an important trading partner. Despite previous trends showing an equal number of companies looking to move away from China as those remaining, current insights suggest that 17 percent of firms anticipate an increased importance of China in their business strategies over the next five years. However, some companies are still planning to reduce their engagement with China.
The growing importance of India and Southeast Asia aligns with companies’ strategies to diversify their supply chains and mitigate political uncertainties.
Interest in the US market has moderated, with only 12 percent of firms focusing more on it compared to 15 percent in 2022. The decline is attributed to economic policy uncertainties.
Europe continues to be a stable region for supply chain activities, with 21 percent of companies looking to expand in Western Europe and 24 percent in Central and Eastern Europe. However, around one in ten companies are exploring opportunities outside Europe.
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