As Covid-19 Disrupts Global Supply Chains, Will Companies Turn to India?

It’s an increasingly viable option for companies anxious about sourcing from China.

by

Vijay Govindarajan

and

Gunjan Bagla

by

Vijay Govindarajan

and

Gunjan Bagla

May 25, 2020

Abstract Aerial Art/Getty Images

Summary.

The authors argue that 2020 — with its stresses from Covid-19 and the tariffs imposed on Chinese goods by the Trump administration — could mark an inflection point in the bilateral trade of goods between the United States and India. They look at India as a sourcing partner for goods, becoming a partial replacement for imports from China. While India still poses obstacles due to practices relating to both land and labor, they argue, foreign companies wishing to build their own factories can overcome these challenges by starting out as a buyer rather than as an investor, understanding that India is a diverse country with rules varying state-by-state, using a cultural interpreter, even when language interpretation isn’t necessary, and understanding that sourcing from India takes time and patience.

America’s relationship with the two most populous countries in the world, China and India, is undergoing a stark, rapid and perhaps permanent transformation. In April, a Pew Center survey found that two-thirds of Americans say they have an “unfavorable” view of China; according to Pew it was “the most negative rating for the country since the Center began asking the question in 2005.” But if China is falling in attractiveness, what is filling its place?

Vijay Govindarajan is the Coxe Distinguished Professor at Dartmouth College’s Tuck School of Business, an executive fellow at Harvard Business School, and faculty partner at the Silicon Valley incubator Mach 49. He is a New York Times and Wall Street Journal bestselling author. His latest book is The Three Box Solution. His Harvard Business Review articles “Engineering Reverse Innovations” and “Stop the Innovation Wars” won McKinsey Awards for best article published in HBR. His HBR articles “How GE Is Disrupting Itself” and “The CEO’s Role in Business Model Reinvention” are HBR all-time top-50 bestsellers. Follow him on LinkedIn.
vgovindarajan
Gunjan Bagla is Managing Director of Amritt Inc, a California consultancy that advises American companies on doing business in India and the author of Doing Business in 21st Century India (Hachette, 2008). Follow him on LinkedIn.

As Covid-19 Disrupts Global Supply Chains, Will Companies Turn to India?

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