IMF Says India Is Benefiting From Global Supply Chain Shift

Washington — India’s push to establish itself as a global manufacturing hub is beginning to show results as international supply chains diversify, with the International Monetary Fund saying it is seeing clear evidence of the shift, particularly in electronics manufacturing.

Speaking at the IMF’s regular press briefing Thursday, Julie Kozack, director of the IMF’s Communications Department, said global supply chain diversification is benefiting India, though the gains have so far been concentrated in specific sectors.

“We do see evidence of supply chain diversification benefiting India,” Kozack said.

“The gains so far have been concentrated in some specific sectors, most visibly in electronics,” she added.

Kozack said India’s electronics exports “rose by 24 per cent in fiscal year 2025-26” and noted that “smartphones have become one of the country’s largest export products.”

She said the increase in manufacturing for exports appears to be driven largely by Indian companies rather than foreign investors.

“Much of this increase in production for exports appears to be happening through domestic contract manufacturers rather than foreign direct investment,” Kozack said.

Her remarks came in response to a question on whether the IMF sees international companies meaningfully diversifying manufacturing operations to India as businesses seek to reduce supply chain risks.

Kozack also reiterated the IMF’s broader assessment that India remains one of the world’s strongest-performing major economies.

“India is one of the fastest growing economies in the world. It remains a key engine of growth for the world,” she said.

According to the IMF’s latest World Economic Outlook update released Wednesday, India’s economy is projected to grow 6.4 percent in fiscal year 2026-27, with growth expected to rise to 6.7 percent in 2027. The Fund also said India’s risk outlook is now more balanced than it was earlier this year.

Asked whether that pace of growth would be enough for India to achieve its ambition of becoming a developed nation by 2047, Kozack said sustained rapid expansion over a long period would be necessary.

“Achieving developed nation status would require India to continue to have very high, sustained high growth levels over a long period of time,” she said, adding that outcomes would also depend on factors such as population growth and currency movements.

Kozack said India has made “significant progress in structural reforms in recent years,” citing implementation of a new labor code, new trade agreements and deregulation at the state level.

To maintain its growth trajectory, she said India should continue reforms aimed at strengthening workforce skills, increasing labor market flexibility, reducing business compliance costs and deepening trade integration.

“India would need to continue on the path of reforms,” Kozack said.

“We encourage India to build on this progress,” she added.

India has increasingly positioned itself as an alternative manufacturing destination as global companies diversify production beyond traditional supply chains.

Government initiatives such as Production Linked Incentive schemes and investment in manufacturing infrastructure have helped expand domestic production in sectors including electronics, semiconductors and renewable energy equipment.

The IMF’s latest assessment reinforces India’s position as one of the world’s fastest-growing major economies as New Delhi pursues its long-term goal of becoming a developed economy by 2047.

Economists have said achieving that goal will require sustained high growth, productivity improvements, greater private investment and deeper integration with global supply chains. (Source: IANS)