Supply Chain Realignment

Limit and manage disruption, mitigate risk, and build resilience and agility

To survive in a dynamic world, driven by ever-evolving industry trends and technological innovation, multinational corporations must find newer ways of conducting business for survival and growth. Further, geopolitical disruptions, rising protectionist policies, regulatory scrutiny, possible COVID-19-like disruptions, restrictions on foreign investments and increasing cybersecurity threats are directly impacting their supply chain strategies. From diversification to reshoring and regionalisation to risk mitigation, policies have been adapted and processes overhauled.

Now, more than ever, CXOs are making tactical and operational changes to navigate through this highly uncertain, fast-changing global environment and meet the needs of a vastly evolved business landscape. In this process, they are seeking expert advice to limit and manage disruption, mitigate risk, and build resilience and agility.

KPMG in India has been closely monitoring the shifting investment trends and supporting clients in their supply chain diversification strategies. Through focused efforts, we are helping clients identify key risk areas that complicate strategic transformation, aiming for business continuity and resilience. Our efforts are channelised to help clients get forward-looking perspectives on areas related to:

Identifying new supply bases in alternative jurisdictions
Shortlisting the right set of partners for sourcing/manufacturing
Navigating complex tax and regulatory procedures across jurisdictions

Devising risk mitigation strategies to reduce transition-related disruptions
Building a supplier development roadmap for operating in a new jurisdiction
Advising on investment in technology and processes to become future ready

Global production networks are complex, sophisticated, interdependent and deeply entrenched, making reconfiguration a challenging task. In an era of global volatility, supply chains are navigating uncharted waters. Businesses continuously need to assess risk exposure, supply alternatives, tax considerations and channel complexities. Further, issues such as governance and regulatory adherence, the use of digital technology and analytics, implementation priorities and roadmaps need a detailed study and domain knowledge. We are here to help as your advisor. At KPMG in India, we use our significant subject matter expertise and multidisciplinary advisory services to demystify the complex implications of a decision to rebalance supply chains.

Neeraj Bansal

Partner and COO–India Global

National Leader–Supply Chain Realignment, KPMG in India

India advantage

India, much like other emerging economies, is exploring ways to build its investment attractiveness and make it a viable contender for global manufacturing/sourcing. The government’s investment-driven policy measures along with corporate tax cuts, investment in infrastructure under the National Infrastructure Pipeline (NIP) and business-friendly changes to labour laws are likely to further underpin India’s attractiveness as a global manufacturing hub.

Notable government reforms*

Atmanirbhar Bharat Abhiyan scheme launched at an estimated USD265 billion
The Product Linked Incentive (PLI) scheme announced with an outlay of USD27 billion for 14 sectors
A USD1.4 trillion National Infrastructure Pipeline (NIP) set up for infrastructure development
Export Promotion Capital Goods (EPCG) scheme launched for duty-free import of capital goods

Supply Chain Resilience Initiative (SCRI) launched, along with Japan and Australia, to build resilient supply chains in the Indo-Pacific region
The PM Gati Shakti National Master Plan launched, which is powered by clean energy and driven by seven engines, namely roads, railways, airports, ports, mass transport, waterways and logistics infrastructure
National Logistics Policy (NLP) announced to enhance business competitiveness and fuel overall economic growth by developing an integrated, efficient and cost-effective logistics infrastructure

What makes India a favourable manufacturing destination?

63rd in world bank’s EODB ranking 2019 (Jumped 79 places from 142 in 2014)

Substantial improvement in:

Resolving insolvency (52^nd from 108^th)
Dealing with construction permits (27^th from 52^nd)

100% FDI allowed in 30+ sectors

FY24 recorded an FDI inflow in USD 70.9 bn

15% one of the lowest corporate tax rate for new manufacturing companies in Asia

USD 27 bn PLI pharmaceuticals, electronics, white goods, batteries, solar cells, etc.
Custom duty deferral for manufacturers and improvement in trade facilitation

Government of India’s strategic priorities

Make India a manufacturing hub for exports

Bring down cost of logistics and boost supply chain across the country

Push growth via infrastructure development

44 mn strong workforce in manufacturing

One of the lowest average labor costs in Asia

USD 2 per hour

125 fortune 500 companies have set up R&D bases in India

2^nd most attractive manufacturing hub globally

India has 14 Free Trade Agreements (FTAs)

Double Taxation Avoidance Agreements (DTAAs) with 89 countries

Sectors of strategic importance in India

emoji_transportation

Automobile

science

Chemicals

drag_indicator

Pharmaceuticals

local_phone

Telecom

Sectors of emerging importance in India

cable

Electronics

api

Semi conductor

add_business

Textile

backpack

White goods

fastfood

Food Processing

medical_services

Medical devices

toys

Toys

energy_savings_leaf

Renewable energy

KPMG In India’s Supply Chain offerings

We understand the complexities of today’s volatile and high-risk business environment. Our team of experienced professionals work across geographies and sectors to support organisations with comprehensive offerings and a value-driven approach specifically revolving around the following areas:

store

Marketing Landscaping

Assessment of market opportunity

business

Strategy building

Business planning
Developing supplier ecosystem
Mergers and acquisitions, joint ventures, PE, etc. opportunity identification
Devising sales channel strategy

insights

Location assessment

Factory and office location identification

dynamic_feed

Regulatory and incentive assessment

Central and state incentives
Conceptualising and easing regulatory compliance

account_tree

Investment analysis

Tax and regulatory registrations for new entities
Tax efficient holding jurisdiction analysis
Post-deal services

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Implementation strategy

Smart manufacturing framework
Cost optimisation/revenue enhancement
Logistics and warehousing operating model
Tax compliance, trade and regulatory advisory

Opinions from our experts

Strategic role of data and analytics in modern supply chains

Investing in supply chain data and analytics capabilities is no more an option but an urgent imperative that needs to be undertaken.

Strategic role of data and analytics in modern supply chains

The future of automotive supply chains: Connected, collaborative and resilient

Automotive supply chains are being reshaped by groundbreaking technologies and the continual evolution of consumer demands driving changes globally.

The future of automotive supply chains: Connected, collaborative and resilient

India’s shipbuilding ambitions: Where are we now and what to do next?

To truly build a robust manufacturing base, we need to proactively address these challenges with strategic interventions and collaborative effort.

India’s shipbuilding ambitions: Where are we now and what to do next?

India’s semiconductor ambitions: How to move up the value chain?

With a strong focus on becoming a global semiconductor hub, India aims to establish a robust presence across the chip value chain.

India’s semiconductor ambitions: How to move up the value chain?

Navigating the path to a sustainable supply chain

In an effort to reduce their carbon footprint and achieve net-zero goals, firms are adopting sustainable supply chains by leveraging technology

Navigating the path to a sustainable supply chain

Navigating disruptions: The supply chain outlook for 2024

As data generation accelerates, with millions of dynamic datasets proliferating across the supply chain landscape

navigating-disruptions-the-supply-chain-outlook-for-2024

Webinars

China reset and its impact on global trade dynamics and business

Arun Kumar in conversation with Ambassador Craig Allen, President USCBC and, Professor C Raja Mohan

Production and Supply Shifts in the New Reality

KPMG Germany – India Webinar

India: New Reality, Unprecedented Opportunities

U.S. International Corridors

India insights

Our insights is your gateway to thought leadership and in-depth reports. Explore our curated collection of valuable content, where we delve into complex business challenges, share industry trends, and provide actionable insights.

KPMG Powered Enterprise Supply Chain

Making supply chains seamless

Sustainable supply chain

Building resilient and sustainable supply chain ecosystems

An Indian logistics professional using a digital map to track deliveries, set in a modern office environment.

Navigating disruptions: The supply chain outlook for 2024

As data generation accelerates, with millions of dynamic datasets proliferating across the supply chain landscape

Eco-forward Supply Chains

Revolutionising global commerce through sustainable sourcing and distribution practices

Safeguarding your Software Supply Chain Landscape

Insights into the evolving Software Supply Chain Security (SSCS) risks and safeguarding SSCS landscape

Safeguarding your Software Supply Chain Landscape

Supply chain resilience: a strategic imperative

The thought leadership outlines a structured approach that organisations can take to build supply chain resilience and how they can get started

lsupply-chain-resilience-a-strategic-imperative

Pivoting to Leadership: Re-imagining supply chains for India’s emergence as a credible alternative for global clean energy manufacturing

Examining the opportunities for India to emerge as a credible alternative frontier for clean technology manufacturing

Navigating the path to a sustainable supply chain

In an effort to reduce their carbon footprint and achieve net-zero goals, firms are adopting sustainable supply chains by leveraging technology

Global Insights

The future of supply chain

From ESG to robots and the metaverse, supply chain leaders have new challenges to prepare for.

Optimize your operations

Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work.

The future of procurement

To keep ahead of change, procurement needs to not just evolve but innovate. Quickly.

Sustainable supply chain

Revaluating the supply chain through an ESG lens.

Supply chain trends 2024: The digital shake-up

With digital opportunities sweeping the supply chain landscape, readiness and line of sight will be paramount to success.

KPMG named ‘a worldwide Leader’ in Supply Chain Oracle Ecosystem Services by IDC MarketScape

KPMG firms recognized for helping clients build new capabilities and ways of working that stick.

Sources:

* Invest India, accessed on 5 April 2024
1. Invest India and Make in India, accessed on 5 April 2024
2. Report on Production Linked Incentive Scheme for Large Scale Mobile and Component Manufacturing by Ministry of Electronics & Information Technology, Government of India, September 2021, accessed on 5 April 2024
3. Press Information Bureau, Ministry of Textiles, accessed on 5 April 2024
4. Invest India report Inside India Production Linked Incentives Schemes: White Goods
5. Production Linked Incentive Scheme for Food Processing Industry, accessed on 5 April 2024
6. Nine PLI schemes have been approved by the cabinet so far, Ministry of Commerce & Industry, accessed on 5 April 2024

Note to readers: We have relied on secondary sources, which are considered reliable, but have not independently verified the data. KPMG shall not be liable and/or responsible for any reliance placed on the content of the website.