India Inc is rewiring organisational risk models in the wake of inflationary pressures provoked by Russia’s invasion of Ukraine and sweeping lockdowns in China that have hit supply chains and transformed the business landscape, industry leaders said.

Companies have been forced to look to Indonesia, Thailand, Bangladesh and Vietnam as sourcing alternatives to China.

Building stronger supply chains has become crucial, said Sanjiv Mehta, president of the Federation of Indian Chambers of Commerce & Industry (Ficci). “There is this huge disruption in the global supply chain that has impacted many businesses, especially automobiles,” said Mehta, who is also the chairman of Hindustan Unilever, the country’s biggest consumer goods company.

Closely monitoring situation

“For FMCG, disruption in the supply of a single chemical will impact manufacturing cycles. It has now become important for manufacturing to be closer to consumers, so also to cut on freight and travel costs to cut carbon footprint. Reconfiguring the supply chain from the lens of sustainability and resilience has become important,” Mehta said. TV Narendran, president of CII and Tata Steel managing director, said the protracted military operations in Ukraine are a matter of concern.

The evolving situation is being closely monitored by industry for its impact on input prices and overall growth path,” he said. “We hope that critical macroeconomic indicators such as fiscal deficit, inflation and current account deficit remain within reasonable limits. We are also monitoring the impact on key sectors. As per CII’s analysis, a US $10 per barrel increase in oil prices could have a total direct and indirect impact of around 30 basis points on overall inflation. It is hoped that based on the requirement, foreign exchange reserves can be used to cushion the economic disruptions.”