In a strategic move to bolster its supply chain diversity and reduce dependence on China, Walmart, the world’s largest retailer, has significantly increased its imports from India. The shift is evident in recent data, showcasing that from January to August this year, Walmart imported 25% of its goods to the US from India, a substantial rise from 2% in 2018.
While China still stands as Walmart’s primary country for imports, its share has decreased from 80% in 2018 to 60% during the same period. This transformation underscores the impact of heightened political tensions between the US and China and the escalating import costs from China.
Andrea Albright, Walmart’s Executive VP of Sourcing, emphasized the importance of resilient supply chains, best prices, and reducing dependency on a single supplier or location. The bill of lading data, while offering a partial view of Walmart’s sourcing, aligns with the retailer’s pursuit of increased manufacturing capacity and a diversified global supply chain.
Walmart has committed to importing $10 billion worth of goods annually from India by 2027, a significant leap from its current annual imports of around $3 billion. This commitment follows Walmart’s accelerated presence in India after acquiring a majority stake in Flipkart in 2018.
India, with its expanding workforce and technological advancements, presents an appealing alternative to China for large-scale, low-cost manufacturing. Walmart’s sourcing from India covers a broad spectrum, including toys, electronics, bicycles, pharmaceuticals, packaged food, dry grains, and pasta.
The COVID-19 pandemic highlighted vulnerabilities in global supply chains, prompting a reevaluation by major US importers like Walmart. The retailer’s sourcing strategy extends beyond India to countries like Pakistan and Bangladesh, contributing to the diversification of product sourcing for contingency plans.
Experts suggest that rising shipping costs from China and increased labor expenses in the country have influenced Walmart’s pivot to India. The central bank’s estimates indicate that average wages for unskilled and semi-skilled workers in India are comparatively lower than the varying minimum wages in China.
Walmart’s CEO, Doug McMillon, met with Indian Prime Minister Narendra Modi earlier this year, reinforcing Walmart’s commitment to supporting India’s manufacturing growth and generating opportunities. This move aligns with Amazon’s goal to achieve merchandise exports worth $20 billion from India by 2025, making India a key player in the global supply chain landscape.
Rajesh Kharabanda, CEO of Freewill Sports, a small Indian soccer ball supplier, highlighted the positive impact on businesses like his due to this shift in sourcing.
