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Walmart’s strategic pivot: Embracing India for a diversified supply chain and cost-efficient procurements while cutting imports from China

The import costs from China are on the rise. Furthermore, the political tension between the US and China has prompted major US companies to explore alternative options, including India, Thailand and Vietnam.

The world’s largest retailer, Walmart, is increasingly turning towards India for imports while reducing its dependence on China. The shift aims to lower costs and diversify the supply chain. As per a Reuters report, the data from Import Yeti revealed that between January 2023 and August 2023, 25 per cent of US imports were from India. If we compare it to 2018, the number was just 2 per cent back then. During the same period, the imports from China were at 60 per cent which is 80 per cent lesser compared to 2018.

Notably, the import costs from China are on the rise. Furthermore, the political tension between the US and China has prompted major US companies to explore alternative options, including India, Thailand and Vietnam.

Walmart’s Executive Vice President of Sourcing, Andrea Albright, recently emphasised the need for supply chain resilience in a statement. Albright cited the constant challenges of natural disasters, shortage of raw materials and geopolitical concerns to back the strategic change in the source of imports.

Reports suggest India has become a focal point for the company’s manufacturing endeavours. Not to forget, Walmart acquired a 77 per cent stake in Indian e-commerce from Flipkart, intensifying its presence in the Indian market. By 2027, Walmart aims to import USD 10 billion of goods annually from India. Currently, it is importing USD 3 billion worth of goods every year.

The imports from India include various goods, including pharmaceuticals, packaged food, pasta, dry grains, and bicycles. India h, as an experienced and complex working workforce, adds to the technological advancements that position it as a favourably large-scale and low-cost manufacturing hub. The changes in India’s image as a manufacturing hub have made it a potential and attractive alternative to China.

Walmart’s relationship with India is not limited to trade—the company employs around 1,00,000 people there. In May 2023, Walmart’s Chief Executive Officer (CEO) Doug McMillon met India’s Prime Minister Narendra Modi and expressed the company’s commitment to supporting the country’s manufacturing growth.

Walmart is one of many companies shifting to be an import hub to India. As per the reports, companies like Amazon are also looking at the possibilities of merchandise exports from India in the coming years.

From a business point of view, China is becoming a headache for enterprises like Walmart. There has been a sharp increase in China’s shipping and labour costs. Furthermore, the vulnerabilities exposed by events like the COVID-19 pandemic have forced the companies to look for alternatives.

Amid global uncertainties, Walmart’s move towards India aligns with the company’s commitment to a diversified and resilient supply chain.

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OpIndia Staff
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