Global Value Chains Enter a New Era: Balancing Efficiency with Resilience

Global value chains are undergoing a structural transformation, according to the joint report “Evolving Landscape of Global Value Chains” by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Boston Consulting Group (BCG).

For decades, globalization and integrated supply networks steadily reduced costs, making industries such as automobiles, renewables, chemicals, and pharmaceuticals cost competitive. However, this advantage is now under strain. Successive shocks from pandemic disruptions, climate events, and stricter sustainability requirements have revealed the vulnerability of hyper-optimized networks. As a result, companies can no longer rely solely on efficiency and scale; they must design value chains that are diversified, digitally enabled, and compliant with evolving global standards.

Commenting on this shift, Rahul Jain, Managing Director and Senior Partner at BCG, says, “The new rules of trade are reshaping value chains shifting from cost-only to multi-variable design, single-country hubs to regional blocs, reactive exports to agile trade hubs, and paper compliance to digital traceability.”

Building on this, the report notes that these changes bring both opportunities and risks. Companies face rising costs and stricter compliance thresholds, but those that embrace digital visibility, resilient regional structures, and verifiable standards can strengthen global trust and capture long-term growth.

Highlighting India’s role, Abhishek Bhatia, Managing Director and Partner at BCG, says, “India has a unique opportunity to deepen its integration into global trade networks. By strengthening domestic capacity, leveraging FTAs, and investing in innovation, India can position itself as a trusted hub in the evolving value chain landscape.”

Reflecting on the report, Jyoti Vij, Director General, FICCI, says, “The evolution of global value chains is both a challenge and an opportunity. With the right balance of efficiency, resilience, and sustainability, India can play a central role in shaping the future of trade.”

The report outlines four imperatives as the way forward for India in this new environment:

• Make in India for India: Strengthen domestic capacity to reduce import dependence and secure critical value chains across sectors such as semiconductors, renewables, and pharmaceuticals.
• Make in India for the World: Leverage free trade agreements and new market access opportunities to embed India more deeply into global value chains, particularly in Europe and emerging geographies.
• Move Up the Value Chains: Transition into higher-value segments by investing in innovation, advanced manufacturing, and disaggregated industry niches.
• Build Digital & Green Value Chains: Integrate digital command centers, traceability tools, and sustainability practices as non-negotiable elements of competitiveness in an era where compliance increasingly determines market access.

Speaking on the future outlook, Ashok Rajani, Managing Director and Partner at BCG, emphasizes, “The future of trade will be shaped as much by digital traceability and green standards as by cost and speed. Companies that move early to integrate these capabilities into their value chains will gain a lasting advantage.”

It concludes that resilience is no longer the final objective but the starting point for long-term competitiveness. Companies that act decisively now by embedding adaptability, digital innovation, and sustainability into their value chains will not only withstand disruption but also position themselves as indispensable partners in the redefined global trade landscape.

Additional data points:

· India is emerging as a key beneficiary of shifting trade flows – USA’s $150 Bn import cuts from China have already created nearly $23 Bn in new exports for India.

· Production-Linked Incentive (PLI) schemes have attracted $20+ Bn in investments, generating $191 Bn in output across electronics, IT, and pharma.

· India’s relatively low export dependence (20–21% of GDP; USA share ~2%) provides short-term insulation from tariff shocks.

· New trade corridors are opening trillion-dollar opportunities:

• India–UK FTA provides duty-free access for 99% of tariff lines, unlocking a $98 Bn market.
• A potential India–EU deal could open access to $570 Bn in trade flows currently dominated by China.

· Indigenization of critical imports is urgent – India still imports 70% of APIs, 50%+ of solar wafers, and key electronic components.

· Initiatives like PLI, ALMM, and semiconductor projects (e.g., Micron’s ATMP facility) are first steps toward building secure value chains.

· Compliance and sustainability are becoming decisive for market access – EU’s Carbon Border Adjustment Mechanism (CBAM) now links trade to verified carbon traceability.