In an effort to save costs and diversify its supply chain, Walmart is importing more goods into the United States from India and lessening its reliance on China.
Between January and August of this year, the largest retailer in the world transported 25% of its imports into the United States from India, according to bill of lading data that Yeti showed. In contrast, it was only 2% in 2018.
The same data indicates that over the same period, China accounted for just 60% of its shipments, down from 80% in 2018. Indeed, China continues to be Walmart’s top import destination.
This change demonstrates how big American corporations are purchasing more from India, Thailand, and Vietnam as a result of growing import costs from China and growing political tensions between Washington and Beijing.
In an interview, Andrea Albright, Walmart’s senior vice president of sourcing, stated, “We want the best prices.” I therefore require our supply chains to be resilient. We continually have to deal with anything from hurricanes and earthquakes to shortages of raw materials, so I can’t depend on any one supply or location for my goods.”
Walmart said in a statement that the bill of lading data only provided a portion of the information about what it sourced and that adding redundancy “does not necessarily mean” that it was relying less on any of its sourcing markets. “We’re a growth business and are working to source more manufacturing capacity,” stated Walmart.
Walmart’s plans to increase its production capacity now heavily rely on India, according to Albright.
Since purchasing a 77% share of Indian e-commerce company Flipkart in 2018, Walmart has been rapidly expanding in India. It made a commitment to import $10 billion worth of commodities from India annually by 2027. It is still on course to meet that goal, according to Albright. Currently, India is the source of about $3 billion in annual imports.
WORKFORCE AND TECHNOLOGY ARE KEY DRAWS.
According to Albright, Walmart imports goods into the United States from India that range from toys and electronics to bicycles and medications. She said that popular imports from India include pasta, dry cereals, and packaged food.
India’s stock market has surged to all-time highs this year, and analysts believe that this nation is most suited to surpass China in large-scale, low-cost manufacturing.
Walmart was drawn to the company by its quickly expanding workforce and cutting-edge technology, according to Albright. Conversely, China said last year that its population had decreased for the first time in 60 years.
In Bangalore, Walmart began its sourcing activities in 2002. Currently, the corporation employs over 100,000 individuals in the nation, including temporary workers, dispersed across multiple offices under its sourcing operations, Flipkart Group, PhonePe, and Walmart Global Tech India unit.
Indian Prime Minister Narendra Modi and Walmart CEO Doug McMillon met in May of this year; Modi described the discussion as “a fruitful one.”
May 14: “Happy to see India emerge as an attractive destination for investment,” tweeted Modi on X, the erstwhile Twitter platform. Walmart, according to McMillon, would “continue to support the country’s manufacturing growth and create opportunity.”
Amazon, a competitor of Walmart, stated last month that it hopes to export $20 billion worth of goods from India by 2025.
One business that has profited is Freewill Sports, a little Indian soccer ball supplier, according to its chief executive, Rajesh Kharabanda, in an interview.
According to supply chain specialists, another factor in the shift to India has been the growing cost of shipping goods from China.
“In comparison to other manufacturing centres, sourcing from mainland China has become less competitive due to rising labor costs,” stated Chris Rogers, research analyst at S&P Global Market Intelligence’s Panjiva supply chain analysis department.
China’s minimum salary ranges from 1,420 yuan to 2,690 yuan ($198.52 – $376.08) per month, with variations occurring from province to province and occasionally even city to city. According to central bank estimates, the average monthly salary for unskilled and semi-skilled workers in India ranges from approximately 9,000 Indian rupees to 15,000 Indian rupees ($108.04 – $180.06).
FURNISH CHAIN SNAGS
The COVID-19 pandemic revealed flaws in international supply networks and demonstrated the over-dependence of US importers on a limited number of markets.
“Planning for a geopolitical event is like planning for a hurricane,” stated Albright. “What I can control is where my product is coming from and how I make sure that Christmas still happens if something happens in our supply chain.”
Walmart’s policy has also helped Bangladesh and Pakistan, which have grown as suppliers of clothing and household goods, according to Albright.
According to U.S. import records, Mundra Port in Gujarat, the biggest private port in India, was the port of departure for at least eight Freewill shipments that made their way to Walmart warehouses last year.
Rajesh Kharabanda, the chief executive of Freewill, stated in an interview that “there is a newfound confidence in the Indian manufacturing industry and also the availability of factory infrastructure.”
According to the Central Bank of India, the GDP of the nation will grow by 6.5% in the current fiscal year. This year, China is predicted to increase by about 5%.
“There has definitely been a bigger impact in the last 12 to 18 months,” stated Shekhar Gupta, whose family business, Devgiri, has been supplying Walmart with floor carpets for almost ten years. “That’s when Walmart started putting a true strategy behind how they wanted India at the centre of their growth.”
