With the disruptions in supply chains, every company that relied on inputs from abroad has been severely impacted. It is becoming evident that the supply chain strategies that were most celebrated in pre-COVID-19 world can no longer be relied upon. For instance, the lean or the ‘just-in-time’ inventory strategies that entail manufacturers to maintain minimum raw material, may need to be revaluated. There is thus a pressing need to re-engineer the global supply chains wherein the fundamental assumptions may need to be re-examined, manufacturing bases may need to be diversified, trade channels may need to be altered, and investment destinations may see a shift.
In line with the urge to create a resilient supply chain system, the consumption-driven developed economies such as the EU, Americas and Asia are not only rethinking their business strategies, but also are beginning to look at other nations to mitigate their supply chain risks. For instance, Japan has earmarked US$ 2.2 billion economic stimulus package to help its companies shift production out of China as the pandemic disrupted supply chains between the two trading partners.
As companies look to fix their broken value chains in the short term and reduce their supply chain risks in the long term, India has an exclusive opportunity to emerge as a preferred business destination during and after the COVID-19 pandemic. Recognizing this opportunity, the Honorable Prime Minister of India, in his address to the nation on 12 May 2020, laid-out his vision of an ‘Atmanirbhar Bharat’ (Self-reliant India) and outlined economy, infrastructure, system, demography and demand as the five pillars.
EY’s report on ‘Managing the impact of COVID-19 on India’s supply chains’ examines how can the vision of self-reliant India be realized by strengthening the social and economic pillars, while leveraging and improving the other four pillars – infrastructure, system, demography and demand. The report presents an in-depth analysis on:
- The value chains of 15 key sectors in India
- The disruptions in the sectoral value chains caused due to the COVID-19 pandemic
- The opportunities and roadmaps to re-engineer and overhaul the Indian business machinery to make the country an attractive destination for foreign and domestic value chain investments
- Sector-specific ‘possible interventions’ for the governments and private sector stakeholders – classified into short, medium and long-term categories – focused at creation of a strategic plan to return business to scale expeditiously, including building a resilient supply chain and planning for the “new normal”.
Key areas of intervention
While the report ‘Managing the impact of COVID-19 on India’s supply chains’ lists out sector-wise thought-through possible interventions, some major common areas of intervention as the economy prepares to tap on the potential opportunities being presented by the ‘New Normal’ scenario are as below: