Key Points

The report, titled "Evolving Landscape of Global Value Chains," underlined that scale and efficiency, though still crucial, must now be matched by resilience, adaptability, and compliance to withstand shifting trade flows.

India is among the biggest beneficiaries of shifting trade flows. The US's USD 150 billion import cuts from China have already created nearly USD 23 billion in new exports for India, the report asserted.

"Global trade flows are shifting from single-country dependence to multi-region networks. Blocs like IPEF, BRICS+, and ASEAN are pushing near/friendshoring alliances to reduce dependence on other countries. USA import cuts from China (USD 150 billion) reshaped regional trade, with India gaining USD 23 billion in new exports," the report read.

India's relatively low export dependence (20-21 per cent of GDP; the US share 2 per cent) provides short-term insulation from tariff shocks, the report has asserted.

Further, the joint report said India's Production-Linked Incentive (PLI) schemes are further boosting the shift.

Production-Linked Incentive (PLI) schemes have attracted over USD 20 billion in investments, generating USD 191 billion in output across the electronics, IT, and pharmaceutical sectors.

The report points to new trade corridors as trillion-dollar opportunities for India.

The India-UK Free Trade Agreement (FTA), which is expected to provide duty-free access for 99 per cent of tariff lines, can potentially unlock a USD 98 billion market.

Additionally, a potential India-EU agreement, expected before the end of 2025, could give India access to nearly USD 570 billion in trade flows, which China currently dominates.

The report, though, warns that India continues to rely heavily on imports for critical sectors. Over 70 per cent of Active Pharmaceutical Ingredients (APIs), more than 50 per cent of solar wafers, and several key electronic components are still sourced from abroad.

Initiatives such as the PLI scheme, the Approved List of Models and Manufacturers (ALMM), and large-scale semiconductor projects are described as important first steps toward building secure and resilient domestic value chains.

Industries must make decisive bets on indigenizing inputs in critical sectors to cut dependence and secure their value chains, the report read.

Rahul Jain, Managing Director and Senior Partner at BCG, says, "The new rules of trade are reshaping value chains, shifting from cost-only to multi-variable design, single-country hubs to regional blocs, reactive exports to agile trade hubs, and paper compliance to digital traceability."

Reflecting on the report, Ms. Jyoti Vij, Director General, FICCI, says, "The evolution of global value chains is both a challenge and an opportunity. With the right balance of efficiency, resilience, and sustainability, India can play a central role in shaping the future of trade."

The report also outlined four imperatives as the way forward for India in this new environment: Make in India for India; Make in India for the World; Move Up the Value Chains; and Build Digital and Green Value Chains.

- ANI