Global Supply Chains May Take 15 Years to Realign, Says Ex-Commerce Secretary GK Pillai

Changing global supply chains is not an easy process, and it could require up to 15 years, said former Union Commerce Secretary Gopal K Pillai on Thursday. His remarks come at a time when India faces mounting pressure to diversify its trade away from the United States, which has imposed steep 50% tariffs on some Indian exports.

"Finding new customers, sourcing new raw materials, extracting them, setting up plants, and putting entire chains into process takes three, five, ten or even 15 years," Pillai explained while taking part at a discussion on "Rise of Asian Regionalism in the Wake of Trump Tariffs" in New Delhi.

Pillai estimated that in the next five years, India could reconfigure just 10-20% of its supply chain. He stressed that much of this adjustment will be led not by governments but by private businesses.

On the broader question of Asian regionalism, Pillai noted that a clear direction was still lacking. "Every country is increasingly looking inward with protectionist instincts," he said. At the same time, he argued that trade imbalances must be assessed differently. For instance, although India runs a trade deficit with countries such as South Korea and Japan, Korean companies have invested $7.2 billion in India over the past 15 years, with firms like Samsung reinvesting almost all profits earned in India back into the country.

“You have to weigh the balance in terms of investment flows and the spillover benefits,” he explained.

Pillai was also critical of how Indian businesses use free trade agreements (FTAs). He pointed out a growing mistrust between industry and government and urged companies to engage more closely with policymakers and effectively flag issues.

"75% of India’s exports fall under the 'others' category because businesses don’t bother specifying products properly under tariff lines. At the same time, the government is also at fault for sticking to 8-digit tariff lines when the US already has 10, 12, 14, and even 16-digit lines. More precise tariff lines help industries secure WTO [World Trade Organisation]-compatible benefits," he highlighted.

The former commerce secretary said he did not foresee the rise of a ‘new global order’. "Without tackling multilateralism directly, we will only see 'tariffs by stealth' and small adjustments. For India, these incremental adjustments are fine, as we pursue strategic autonomy. We will keep balancing relations with Russia, China and the US, while leveraging our large domestic market," he observed.

The ex-Commerce Minister also predicted that the impact of higher tariffs will reach US consumers in three to six months and eventually the pressure will build within the American economy.