Indian businesses diversify supply chains to build resilience

Indian businesses are redesigning their supply chains to strengthen resilience and support growth, with 70% of executives prioritising supplier diversification and 59% increasing inventory levels, according to new research from DP World’s Global Trade Observatory.

The India Country Report 2026, based on a survey of 451 senior supply chain and logistics executives, found that Indian businesses have stronger expectations for trade growth than their global counterparts. 79% of Indian executives expect trade to accelerate in 2026, compared with 54% globally, while 60% expect high or very high policy uncertainty, against 53% globally.

Supplier diversification is the leading supply chain priority in India, with 70% of executives identifying it as a strategic priority, compared with 51% globally. Inventory building follows at 59%, compared with 44% globally. Friend-shoring is a priority for 35% of Indian executives, broadly in line with the global figure of 36%.

The report said these strategies show that Indian businesses are expanding and redistributing their supply base rather than consolidating it. Technology adoption and entry into new markets are among the main drivers. For supplier diversification, 42% of executives cited new technology adoption and 36% pointed to new market entry. For inventory increases, the figures were 30% and 31%, respectively.

Near-shoring is a lower priority in India, cited by 26% of businesses compared with 32% globally. The report said the country's size and industrial structure make proximity-based strategies less attractive than in smaller countries and those with more integrated industrial bases.

India's trade landscape is also supporting supply chain restructuring. The government has concluded trade agreements with the UAE, Australia, the UK, EFTA states, Oman and New Zealand since 2022, followed by an agreement with the European Union in January 2026. Negotiations with the Gulf Cooperation Council and Israel have also been launched.

The Production-Linked Incentive scheme is supporting the expansion of India's domestic manufacturing supplier base. The report also highlighted Free Trade Warehousing Zones (FTWZs) in Nhava Sheva, Chennai and Cochin as tools that can help businesses manage disruptions, customs processes and working capital requirements.

Goods entering FTWZs are treated as being in the import process rather than cleared. This allows companies to store, process and re-export goods without being exposed to liability on locally unsold inventory. Value-added activities such as quality control and kitting can also be carried out without duties being triggered.

Digitalisation is another major part of India's supply chain resilience strategy. 53% of Indian businesses have fully digitalised customer-facing services, compared with 38% globally, while 45% have fully digitalised supply chain visibility and coordination, compared with 34% globally. Production and factory operations are fully digitalised at 43%, against 30% globally.

Warehousing and fulfilment is the least digitalised area, although 36% of Indian businesses have fully digitalised these operations, compared with 30% globally. The report said further digitalisation in this area could support resilience as businesses increase inventory to manage disruption.

Artificial intelligence is also generating operational benefits. The highest reported impact is improved reliability in route and network optimisation at 29%, followed by time savings in documentation at 26% and cost savings in customs procedures at 25%. The report said these gains show an early but broad-based impact, with AI currently improving existing processes rather than transforming them across entire businesses.

Cybersecurity is the biggest barrier to further digitalisation, cited by 30% of Indian executives, compared with 27% globally. Upfront investment costs were identified by 23%, lack of interoperability and aligned data standards by 19%, skills gaps by 17% and poor connectivity by 11%.

India's logistics costs are estimated at around 8% of GDP, according to the report, which said technology will be important in reducing these costs and supporting new trade opportunities.

Free trade agreements emerged as the top policy priority for further trade growth, cited by 47% of executives, followed by support for digitalisation at 39% and trade facilitation at 37%. At the same time, customs clearance was identified as the most important cause of delays by 54% of respondents.

Trade finance remains a relative strength, with 57% of Indian executives reporting that it is readily available at reasonable terms, compared with 39% globally. The report said access to affordable finance can help businesses absorb the costs of supply chain restructuring and expand into new sourcing corridors.

Infrastructure remains a key challenge. Road networks are the top infrastructure investment priority, identified by 46% of Indian logistics executives, compared with 36% globally. Warehousing and logistics hubs follow at 45%, while border and customs processing infrastructure was cited by 40%.

Road networks are particularly important as they carry around 70% of India's freight but face congestion on key corridors. The report said port-adjacent zones, bonded warehousing and FTWZ arrangements can help reduce exposure to road constraints and customs delays, while longer-term infrastructure investment is needed to address these gaps.

DP World said its integrated trade and logistics network in India spans ports, warehousing, freight forwarding and multimodal connectivity. It serves around a quarter of India's EXIM container market through five container terminals with a combined annual capacity of 6 million TEUs, supported by three FTWZs, 5 million sq. ft. of warehousing space, five container freight stations and eight inland rail terminals.

The network also includes more than 16,000 owned containers, an express logistics network covering 15,000 pin codes, digital freight forwarding and trade finance solutions.

Rizwan Soomar, CEO & MD, Subcontinent, Central Asia, Levant and Egypt, DP World, said Indian businesses are redesigning their supply chains to build resilience and unlock growth.

“Diversified sourcing, strategic inventory, digitalisation and access to new markets are becoming increasingly important in navigating disruption,” he said.

Soomar added that DP World helps businesses trade with greater flexibility and efficiency by connecting ports, inland markets, logistics and technology.

The report concluded that India's trade expansion expectations remain high, supported by its trade policy agenda, digitalisation, access to trade finance and a more diversified supplier base. However, infrastructure gaps, customs delays and the need for more digitalised warehouses and logistics hubs remain challenges.

As global supply chains diversify and new trade corridors emerge, the report said businesses combining supplier diversification, digital visibility, resilient inventory strategies and trade infrastructure will be better positioned to capture growth.