From Resilience to Sustainability: Lessons from 2024 and Expectations for 2025 in India’s Supply Chain

As we conclude 2024, the Indian supply chain and logistics sectors have undergone substantial changes driven by domestic and global factors. Geopolitical tensions, post-pandemic economic recovery, and shifting consumer demands have significantly influenced the landscape. Below, we explore key developments from 2024 and identify critical trends likely to shape India's supply chain in 2025.

The State of Supply Chain and Logistics in India in 2024

Resilience and Adaptation

The Indian supply chain and logistics sectors have demonstrated remarkable resilience and adaptability over the past year. Some key trends include:

• Diversification of Supply Sources: Companies are adopting the "China Plus One" strategy, diversifying supply chains to reduce dependence on single-source suppliers. This includes sourcing from countries like Vietnam and boosting local production capabilities in India.
• Investment in Technology: To improve operational efficiency, businesses have invested heavily in technology. The adoption of advanced analytics, artificial intelligence (AI), and automation has enhanced decision-making and visibility across operations. Reports show companies using AI and Machine Learning (ML) in their supply chains have achieved significant cost and efficiency improvements.

The Impact of Geopolitical Tensions

Geopolitical tensions have become a defining factor for supply chain dynamics in 2024:

• Increased Tariffs and Trade Challenges: Rising tensions, particularly between India and China, have led to higher tariffs, encouraging manufacturers to explore alternative sourcing strategies, such as nearshoring.
• Regulatory Compliance Challenges: Businesses face an increasingly complex regulatory landscape as the Indian government enforces stricter trade regulations. Compliance with laws like the Foreign Exchange Management Act (FEMA) and sector-specific rules has become essential to avoid legal and financial repercussions.

Sustainability and Ethical Sourcing

Sustainability has emerged as a central focus in India's supply chain ecosystem:

• Consumer Demand for Transparency: Approximately 94% of Indian consumers are willing to pay a premium for sustainably sourced products. This consumer-driven demand is compelling businesses to adopt ethical sourcing practices.
• Government Regulatory Pressures: Stricter environmental regulations are pushing companies to align their supply chain operations with sustainability goals, enhancing eco-friendly practices.

Expectations for 2025

Ongoing Focus on Resilience

Companies will continue diversifying their supply chains and investing in technological solutions to improve visibility, efficiency, and operational resilience.

Increased Regulatory Scrutiny

With stricter trade laws and changing political landscapes, businesses must strengthen their compliance mechanisms to navigate evolving tariffs, sanctions, and regulatory frameworks.

Deepening Commitment to Sustainability

Sustainability will remain a top priority. Companies will adopt:

• Eco-friendly practices in logistics and operations.
• Greater transparency in sourcing practices to meet consumer expectations and regulatory mandates.

Encouragement of Collaboration

Public-private sector collaboration is expected to increase, driven by initiatives like the U.S.-India Strategic Clean Energy Partnership. Such partnerships will foster resilience and sustainability in supply chains.

Conclusion

As we step into 2025, India's supply chain and logistics sectors are on the brink of transformation. The focus will remain on resilience, technological innovation, and sustainability. Geopolitical factors, regulatory shifts, and consumer demands will continue shaping this critical industry.

By adopting strategic foresight, fostering collaboration, and aligning with emerging trends, businesses and policymakers can effectively navigate challenges and capitalize on opportunities. These efforts will position India as a central hub in the global supply chain ecosystem.