India is investing in creating higher inventory buffers with a focus to protect businesses from external disruptions, according to a new study. According to the new Trade in Transition research, commissioned by DP World and led by Economist Impact, 40% of Indian companies preferred increasing the length of supply chains to hedge against risks from current geopolitical events. “Further, 47% of respondents from Indian companies found ‘exporting to new markets’ as the most effective means of making their trade operations more resilient as a demand-side strategy. Similarly, from a supply-side strategy, 34% of respondents from Indian companies relied on ‘increasing the use of digital tools for improved inventory management’ to ensure resilience in their trade operations,” the report added. Indian businesses have the ability to capture substantial price benefits by lengthening their supply chains to hedge against geopolitical uncertainties. However, this approach can add to production cost which makes it essential for the companies to evaluate their needs and options. The report finds that the average inventory buffer for around 27% of the companies in India is around two-four weeks, while 20% of companies surveyed have a buffer of around one-three months. To reduce supply chain costs and risks posed by disruption of critical production inputs, around 33% of the companies surveyed from India are strategizing ways to expand into more stable and transparent markets. “The current edition of the Trade in Transition report accentuates India’s opportunity to transform into a global logistics powerhouse. While geopolitical challenges and other disruptions have placed pressure on advanced as well as growing economies, India’s size, rich demographic proposition, and domestic consumption trends have largely insulated it from global shocks,” said Rizwan Soomar, CEO and managing director, DP World Subcontinent. Soomar added that India’s focus on enhancing trade efficiencies have cemented its position as a reliable partner to international businesses that are looking to diversify their supplier base while maintaining supply chain resilience.
Source : livemint