As part of its efforts to reduce costs and diversify its supply chain, Walmart is importing more goods into the United States from India and decreasing its reliance on China, according to data obtained by Reuters.

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 data firm Import Yeti shared with Reuters. In contrast, that was only 2% in 2018.

According to the report, China accounted for just 60% of its shipments in the same time frame, compared to 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.

Due to rising interest rates and rising food costs, American consumers are seeing a decline in their household savings, which has caused Walmart and other retailers to downgrade their forecasts for consumer spending.

“We want the best prices,” Andrea Albright, Walmart’s executive vice president of sourcing said in an interview. “That means I need resiliency in our supply chains. I can’t be reliant on any one supplier or geography for my product because we’re constantly managing things from hurricanes and earthquakes to shortages in raw materials.”

Walmart stated in a statement that while the bill of lading data provided a partial picture of what it sourced, increasing redundancy “does not necessarily mean” that the company was lowering its reliance on any particular market for sourcing.

“We’re a growth business and are working to source more manufacturing capacity,” Walmart said.

According to Albright, Walmart’s efforts to increase its production capacity have seen India emerge as a crucial component.

Following its acquisition of a 77% share in Indian e-commerce company Flipkart in 2018, Walmart has been rapidly expanding its operations in India. It promised, two years later, to bring in $10 billion worth of commodities from India annually by 2027. According to Albright, it is still on course to meet that goal. At the moment, it imports commodities from India valued at about $3 billion annually.

Walmart is bringing products into the United States from India, including gadgets, toys, bicycles, and medications, according to Albright. She also mentioned that pasta, dry cereals, and packaged food are popular imports from India.

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 has 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.”

“Happy to see India emerge as an attractive destination for investment,” Modi wrote on X, formerly known as Twitter, on May 14. McMillon said Walmart 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 tiny Indian football 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.

“Sourcing from mainland China has become less competitive because of rising labor costs versus other manufacturing centers,” said Chris Rogers, research analyst at S&P Global Market Intelligence’s supply chain analysis group Panjiva.

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 from 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).

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,” said Albright. “What I can control is where my product is coming from and how do I make sure that Christmas still happens if something happens in our supply chain.”

Walmart’s policy has also helped Bangladesh and Pakistan, who 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.

“There is a newfound confidence in the Indian manufacturing industry and also the availability of factory infrastructure,” Freewill’s Chief Executive Rajesh Kharabanda said in an interview.

According to the central bank of India, the GDP of the nation would grow by 6.5% in the current fiscal year. This year, China is predicted to increase by about 5%.

“In the last 12 to 18 months there has certainly been a bigger impact,” said Shekhar Gupta, whose family business Devgiri has been selling floor rugs to Walmart for about a decade. “That’s when Walmart started putting a true strategy behind how they wanted India at the center of their growth.”

(Adapted from CNBCTV18.com)