Walmart announced on Monday that it will triple the value of goods imported from India to the United States by 2027, a pivot away from Chinese suppliers that will add up to $10 billion per year.
“As an international retailer that brings value to customers and communities worldwide, Walmart understands that local entrepreneurs and manufacturers are vital to the success of the global retail sector. We see huge potential for Indian suppliers to grow their businesses by leveraging the unique scale and global distribution opportunity Walmart provides,” Walmart CEO Doug McMillon said.
“By significantly accelerating our annual India exports in the coming years, we are supporting the Make in India initiative and helping more local businesses reach international customers while creating jobs and prosperity at home in India. It is also a way for Walmart to bring more high-quality, India-made goods to millions of customers all across the world,” McMillon said.
“Make in India” is Prime Minister Narendra Modi’s effort to bolster Indian manufacturing and encourage stronger, more diverse international investment in Indian markets (“more diverse” investment in practice means “not from China”). India’s hunger for a more potent manufacturing sector grew more acute as tensions between India and China across their Himalayan border increased.
Newsweek saw the announcement as part of a “nationwide pivot” away from China to other trade partners, noting that overall U.S. goods imports from China have declined by “a stark 16.2 percent between 2018 and 2019:
Currently, Walmart estimates Chinese suppliers make up 70-80 percent of its U.S. merchandise, according to the Alliance for American Manufacturing.
However, following a ramping up of tariffs placed on exports from China under President Trump, a host of other, predominantly Asian, countries are now seeing a marked increase in trade with the U.S.
The biggest overall beneficiaries, according to a study from the United Nations Conference on Trade and Development that examines the extent of trade diversion from the trade wars, are: Taiwan, Mexico, the EU, Vietnam, Japan, Canada, Korea, and India.
Newsweek cited analysts who expected U.S. trade with India to continue growing under the Biden administration, in part because low-cost retail chains seek to diversify supply chains that have grown too dependent on Chinese products, and India is appealing as a huge market and stable democracy with “pragmatic” leadership.
Despite China’s relentless efforts to mitigate political fallout from the coronavirus or even turn the virus to its advantage, Newsweek’s analysts suspected the urge to diversify away from Chinese supply chains grew much stronger because of the pandemic, and even if Biden takes a far softer stance toward Beijing than Trump did, the tendency to pivot away from China will continue.
Walmart is also working to increase its share of the Indian retail market after flat international sales growth for the past few years. Walmart acquired an Indian e-commerce company called Flipkart in 2018 and is seeking to grow its business in tandem with the increased exports announced on Monday, presenting the two initiatives as a demonstration of commitment to the Indian economy (one of the other three foreign markets where Walmart sees the greatest potential for growth is China).