Whereas US imports from China declined by 10% from 2018 through 2022 in inflation-adjusted terms, they rose by 44% from India, 18% from Mexico and 65% from the 10 nations of the ASEAN, a latest study by BCG has pointed out. This article is a lookback at the year of 2023 and a try to foresee what to await from the Indian export market in 2024.
A half-decade of disturbance that has included pandemic, trade wars, climate disasters, extreme supply bottlenecks, Brexit, the war in Ukraine, and progressively assertive industrial policies is significantly redrawing the outline of global export markets. Whereas US products imports from China declined by 10% from 2018 through 2022 in inflation-adjusted terms, they rose by 44% from India, 18% from Mexico and 65% from the 10 nations of the Affiliation of Southeast Asian Countries (ASEAN), a recent study by BCG reports.
For illustration, US imports of mechanical apparatus from China shrank by 28% from 2018 through 2022, but expanded by 21% from Mexico, 61% from ASEAN, and 70% from India.
India has risen as one of the champions in global production over the past five years, with its export volumes to the US surging by $23 billion, a 44% increment from 2018 to 2022, whereas China experienced an export decline amid this period, the study says.
With their high consumer visibility on American shelves, Indian products are also becoming more and more popular. The largest retailer in America, Walmart, is sourcing more goods from India, which means more items bearing the Made-in-India label are being sold in its US stores.
Walmart seeks to source in a variety of areas, such as food, consumables, health and wellness, general merchandise, clothing, shoes, home textiles, and toys, where India excels. The goal of sourcing $10 billion worth of goods annually from India by 2027 is on schedule, according to Andrea Albright, executive vice president of sourcing at Walmart, who spoke with ET about this. With yearly exports of roughly $3 billion, India is already one of the top sourcing markets for the biggest retailer in the world, according to the source.
Walmart’s Global Sourcing office in Bengaluru, which opened its doors in 2002, helps customers in 14 markets, including the US, Canada, Mexico, Central America, and the United Kingdom, get their hands on popular products such as apparel, homeware, jewelry, and hardlines made in India.
Why is India that attractive now?
When it comes to direct manufacturing costs, India has a significant advantage as an export hub. The average landed cost of goods made in India and imported into the US, including factory wages adjusted for energy, tariffs, logistics, and productivity, is 15% less than if the goods are made in the US, according to BCG’s calculations. Instead, the average cost of goods landed in the US from China is 21% higher for goods subject to US tariffs related to the trade war and only 4% lower than US costs overall.
In most places, wage inflation has surpassed increases in productivity; however, India has an advantage in this regard. For instance, from 2018 to 2022, labor costs in the US increased by 21% and in China by 24%, after accounting for productivity. According to the BCG analysis, productivity-adjusted labor costs increased by 22% in Mexico and 18% in India. Still, these two nations rank among the most affordable places in the world to manufacture goods, with Mexico offering the USA the most attractive near-shore alternative.
An increasing inclination towards sourcing from India
India continues to be a highly desirable supplier market for American companies, according to a recent study on sourcing, “QIMA Sourcing Survey 2023: Disruption, Diversification, Digitization,” conducted by QIMA, a quality control and supply chain audits company. India has risen through the ranks of preferred procurement partners in recent years.
According to a survey conducted among US and EU-based respondents, 42% listed one or more South Asian countries among their top three sourcing partners, demonstrating South Asia’s continued ascent through the ranks of the most significant buying regions for the West. In comparison, Southeast Asia’s share fell to 33% in the first quarter of 2023.
When examining the individual nations, the leaders of the two regions—India and Vietnam – are seen as equally significant foreign sourcing partners for the West; in fact, over 25% of respondents with US or EU headquarters ranked both countries among the top three sourcing geographies. The tendency stays the same in the current 2024: more and more Indian companies turn to exporting. If you are a business owner in India MCN Asia welcomes you experience its export consulting services in the cities of Hyderabad, Mumbai, New Delhi, Chennai, Pune, Vizar, Nagpur and Kolkata.
According to the survey, India is a desirable sourcing partner for purposes other than textiles. According to industry, companies operating in the Accessories, Jewelry, and Eyewear sector were the most interested in India as a supplier market (naming it among their top three, at 45%), followed by Promotional Products (at 44%). Third place at 40% went to the Textile and Apparel industry, which is typically thought of as India’s “bread and butter.”
When considering companies that made significant changes to their purchasing geography, printing and packaging, home and garden, accessories, and promotional products were among the industries that chose India as their destination of choice. In the previous 12 months, between half and one-third of respondents in these sectors stated that they had increased their sourcing from India significantly.
According to the Qima survey, 73% of US-based buyers (a five-year low) and 85% of EU-based buyers named China as one of their top three sourcing partners, indicating that Western buyers are continuing the long-term trend of reducing their reliance on China. Regarding procurement volumes, 61% and 58% of respondents based in the US and the EU, respectively, stated that they purchased fewer goods from China in Q1 2023 than they did a year earlier.

Even so, China continues to play a significant role in international supply chains, even as they move to other nations.
For US-based respondents, the popularity of Made-in-China products continues to decline, reaching a five-year low. In contrast, for businesses based in Asia (other than China), the survey found that 85% of respondents named China among their top three sourcing partners in 2023, up from 65% in 2019. Given that many of China’s regional rivals depend on Chinese raw materials to fulfill orders that are being diverted to them, the movement of Western supply chains away from China is probably a contributing factor in this.