Supply Chain Realignment

Our Supply Chain Realignment solution is a specialised value-driven offering to help clients build greater resilience into their global supply chains

Our Supply Chain Realignment solution is a specialised value-driven offering

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

Connect with us

IN-FM Global Supply Chain Realignment

Neeraj Bansal

Partner and Head India Global

KPMG in India

Profile | | Phone

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?

Sectors of strategic importance - An overview

Sectors of emerging importance in India

Industry snapshot¹

One of the largest consumer electronics markets in the Asia-Pacific region
Electronics industry expected to reach USD540 billion by FY25
Electronics System Design and Manufacturing (ESDM) expected to generate USD220 Bn in economic value by 2025

Growth drivers

Demand for electronics hardware to reach USD400 Bn by FY25^*
100 per cent FDI allowed under the automatic route

Recent government initiatives

PLI outlay for large scale manufacturing: USD5.7 Bn²
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
Modified Electronics Manufacturing Clusters scheme (EMC 2.0)

Industry Snapshot*

Semiconductor market expected to reach USD110 billion by 2030
Display panel market is expected to reach USD15 billion by 2025

Growth drivers*

Domestic semiconductor consumption expected to cross USD80 billion by 2020
Domestic industry estimated to account for 10 per cent of the global semiconductor market by 2030
100 per cent FDI allowed under the automatic route

Recent government initiatives*

Incentives worth USD10 billion announced under Semicon India programme
50 per cent incentive support on project cost provided for semiconductor and display fabs
50 per cent incentive support provided on capital expenditure for compound semiconductor and OSAT/ATMP facilities

Industry snapshot

Sixth largest exporter of textiles and apparel^*
Exports in the industry is expected to reach USD300 Bn by FY25^*

Growth drivers

100 per cent FDI allowed under automatic route
31 textile parks completed under the Scheme for Integrated Textile Park, 23 under various stages of completion
7 PM Mega Integrated Textile Region and Apparel (PM MITRA) parks approved³

Recent government initiatives

PLI outlay for man-made fibre (MMF) and technical textile: USD1.45 Bn
National Technical textile mission at an outlay of USD194 Mn^* proposed for a period of FY21-FY24

Industry snapshot⁴

Consumer electronics industry is expected to reach USD21 Bn by FY25
Air conditioners market to increase to 16.5 Mn units by FY25 from 6.5 Mn in FY19
Refrigerator market to increase to 27.5 Mn units by FY25 from 14.5 Mn in FY19
LED market to increase to USD8.2 Bn by FY24 from USD3.6 Bn in FY19

Growth drivers

100 per cent FDI allowed under automatic route

Recent government initiatives

PLI outlay for white goods: USD0.85 Bn
Duty drawback scheme
Export Promotion Capital Goods scheme

Industry snapshot^*

World's largest producer, consumer and exporter of spices
World's second largest producer of food grains, fruits, and vegetables
Industry’s output expected to reach USD535 Bn by FY26

Growth drivers

100 per cent FDI permitted under the automatic route
Annual household consumption expected to triple by 2030, making India the fifth largest consumer market

Recent government initiatives⁵

PLI outlay for food products: USD1.5 Bn
41 food parks funded under the Mega Food Parks Scheme sanctioned, 24 are operational and 17 are under implementation (as of March 2024)

Industry snapshot^*

Fourth largest market for medical devices in Asia
The current market size of the medical devices industry in India is estimated to be USD11 Bn
The sector is likely to grow to USD50 Bn industry by 2024

Growth drivers

100 per cent FDI is allowed under the automatic route for both brownfield and greenfield set-ups

Recent government initiatives

PLI outlay for medical devices: USD452 million⁶
Four medical devices parks in India are under-development

Industry snapshot^*

The toys industry is estimated to be USD1.5 billion with a potential to reach USD3 billion by 2028
Sector is expected to grow at 10 to 15 per cent against the global average of 5 per cent

Growth drivers

100 per cent FDI allowed under automatic route

Recent government initiatives^*

The government hiked the import duty on toys from 20 per cent to 70 per cent to support local MSMEs and promote domestic manufacturing
The National Education Policy (NEP) 2020 places special emphasis on including toys as part of the academic curriculum
The Uttar Pradesh Government has allotted 100 acres of land for a toy city

Industry snapshot^*

Ranks 4th globally for total renewable power capacity additions
Aims to achieve 500 GW of renewable energy installed capacity by 2030

Growth drivers^*

3rd largest energy consuming country in the world
Aims to reduce the total projected carbon emissions by 1 billion tonnes by 2030
100 per cent FDI allowed under the automatic route for renewable energy generation and distribution projects

Recent government initiatives^*

PLI scheme for solar PV manufacturing with a financial outlay of USD2.8 billion introduced
The National Green Hydrogen Mission with a total outlay of USD2.4 billion approved

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:

Assessment of market opportunity

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

Factory and office location identification

Central and state incentives
Conceptualising and easing regulatory compliance

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

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

Opinions from our experts

Webinars

KPMG in India contacts

Himanshu Tewari

Partner, Trade and Customs

KPMG in India

Profile |

Mohit Bhasin

Global Co-lead and National Lead, Economic Growth, Government and Public Services

KPMG in India

Profile |

S Sathish

Partner and National Sector Leader – Industrial Manufacturing

KPMG in India

Profile |

Amit Bhargava

National Leader, Metals and Mining

KPMG in India

Profile |

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.