India scoops supply chain interests at Chinese expense, analysts see sustainable water solutions as key


New Delhi — In 2021, China gained less share of global supply chain investment than in the previous year, but India is a beneficiary of global companies looking for alternative manufacturing sites Turned out.

Global trends, geopolitical competition, and India’s national economic policy for independence could ensure that this trend continues. Global business analysts said India’s long-term success as an alternative manufacturing hub for its global supply chain depends on domestic solutions for water management in sustainable countries.

Gopal Reddy, founder of Ready for Climate and founder and CIO of Chakra Capital Partners, a long / short equity hedge fund, should work proactively for India to avoid repeated serious water crises in China. I told the Epoch Times on the phone that there was one. Today, it threatens the world’s supply chains.

Lady said water is an “invisible and important input” for all economic activity, and the lack of water in China today has pushed the world’s supply chain beyond its limits. ..

“It’s all about water,” he said, adding that it’s worth noting that a typical smartphone needs 3000 gallons of water to produce.

“China is structurally lacking in water resources and electricity to sustain its economy. This is not a theoretical 20-year problem. This is happening now and affects everyone on the planet. “It will give,” said Massachusetts-based Reddy in a strategic report (pdf) published in November 2021.

Lady said India needs to understand how power shortages and structural water scarcity are closely linked, and recent discussions on the transition of global supply chains to countries such as India and Vietnam. Now we need to take into account that water scarcity is a major long-term problem in the energy market. World economy.

“Still, in a globalized economy that is very complex, tightly interconnected and driven by a time-sensitive supply chain, there is no such thing as a locally isolated water crisis. It will make ripples around the world and affect our suppliers and customers alike, “said Torsten Kurth and Adrien Portafaix. Boston Consulting Group (BCG) October 2020.

Kurth and Portafaix reiterated that the World Economic Forum (WEF) ranked the water crisis higher than terrorism, the financial crisis and the energy price shock in the 2020 Global Risks Report.

The Global Risks Report 2022 released On January 11th, we will talk about the need for organizational resilience and what we can learn from the challenges of the last two years.

“Companies that manage risk well will thrive in a changing risk environment and build trust with their stakeholders,” WEF said in a report listing Planet Earth as one of three global risk areas. I am saying.

Lady said finding a solution to the water sustainability problem should be part of the long-term policy of the host government and the policy of the investment company.

Business outside of China

Research firm Gartner reveals In the 2020 survey 33% of supply chain leaders have moved their businesses from China or plan to move by 2023.another Research by UBS Evidence Lab It turns out that 71% of manufacturing exporters planned to or continue to move some production from mainland China in late 2020, compared to 57% in the previous year. rice field.

Kamala Raman, senior director and analyst of Gartner supply chain practices, said in a report that the turmoil caused by the COVID-19 pandemic is only one factor in the recent widespread turmoil in the global supply chain. ..

“Popular alternative locations are Vietnam, India and Mexico. The second main reason for moving businesses from China is that supply chain leaders want to increase the resilience of their networks,” Raman said. He added that the first reason was the increase in tariffs due to the US-China trade war.

According to China’s Ministry of Water Resources, China accounts for only 6% of the world’s freshwater resources, with an estimated per capita water resources of 2100 cubic meters, while the global average is 7,831 cubic meters (7,831 cubic meters).pdf).

Water resources per capita in the United States are 10,491 cubic meters, while water resources in Australia are 25,097 cubic meters.According to national measurements, India’s per capita readings in 2021 were disastrous 1,486 cubic meters. Ministry of Water. The United Nations defines water scarcity as availability of less than 1000 cubic meters per person per year.

Lady said nearly 700 million Chinese live in areas that are considered to be highly water-stressed. For example, the depletion of groundwater in these areas around Beijing is so severe that parts of the capital sink more than 14 centimeters a year.

Reddy states that India will replace China as a manufacturing host in the global supply chain, and India needs to find a sustainable and long-term solution for managing water resources.

“In agriculture, that means drip irrigation, drought-resistant grain stocks, or crops that use less water. There’s a lot you can do,” Reddy said.

In industrial processes, water consumption is primarily due to power generation. Coal, nuclear and natural gas power plants all consume water. Fortunately, according to Reddy, there are many developments in alternative energy pathways that use less water.

“The problem is that many of these alternative energies and technologies do not provide the reliable power needed to carry out industrial processes,” Reddy said, although China has many alternative energy productions. , Added that it is not specifically useful for supply. Chains because these energy sources are variable.

Epoch Times Photo
South Korean President Munjain (4th floor) and Indian Prime Minister Narendra Modi (4th floor) cut the ribbon while Uttar Pradesh’s Prime Minister Yogia Ditianas (3rd floor) is watching when the world’s largest smartphone factory is launched. A plant that is an extension of the existing Samsung India facility in Noida on July 9, 2018. (Money Sharma / AFP via Getty Images)

India Sustainable Solutions

Indian Prime Minister Narendra Modi said: His virtual address He told the World Economic Forum’s Davos Agenda 2022 on January 17 that this is the best time to invest in India.

“We are constantly working to tackle every challenge. Today, India is promoting“ ease of business ”. Government control is shrinking. By simplifying and reducing corporate tax rates, India has become one of the most competitive countries in the world, “says Modi.

Kurth and Portafaix state in their report that water is a dynamic resource because it is not easy to manage because the amount of water changes daily. Water management is “effective” only when it “protects local resources and a wide range of supply chains.” The question is how to develop such a system. “

BCG analysts said that even most “positive organizations” consider water risk to be associated with water use and misuse that are harmful to the environment and communities. However, more than half do not understand that water and its management can impact operations, supply chains, or performance.

They proposed a “three-way assessment and mitigation approach” for businesses to mitigate the water crisis. This involves carefully mapping the supply chain to identify how important each supplier and transportation provider is to business continuity.

Reddy is “low carbon strength, low water strength” as India is working to create a roadmap for industrial independence and make it an attractive destination for global investment and global manufacturing. It is necessary to utilize promising technology that guarantees. , And high reliability. “

“The roadmap has some very promising technologies in different parts of the world. At present, none of these products are ready for mass deployment. Therefore, low carbon strength, low water. It will probably take at least another three to four years to acquire the technology to actually achieve strength and reliability, “he said.

Reddy gave an example of a company called NetPower that redesigned a natural gas power cycle. Since carbon dioxide is used as a heat exchange method, it does not consume water.

“Carbon dioxide is produced, which is 100% pure carbon dioxide, so it’s much easier to recover and store it than to process it from a coal-fired power plant,” he says. I did.

He gave examples of other energy technologies, but said that these pilots appeared in 2024-25 and India should tackle them in advance.

“There are several companies working on megawatt-scale energy storage without the use of lithium-ion batteries. They use a variety of chemicals that can store energy at high density for long periods of time. If you can do it, all of the sudden wind and solar power can be a useful source of energy, which is 100%, uptime and reliable, and these are very promising technologies. , Many of them are still very early, “says Reddy.

Venus Upadayaya

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Venus Upadhayaya reports on various issues. Her area of ​​expertise is geopolitics in India and South Asia. She reports from the highly volatile Indian-Pakistan border and has contributed to India’s mainstream print media for almost a decade. Community media, sustainable development and leadership continue to be her key areas of interest.