Manufacturing Industry in India
One of the oldest civilizations, India, has a long history of manufacturing. But Indian manufacturing industry saw a disruption when Suzuki came in India along with scientific manufacturing practices. This has lead to the upswing of manufacturing industry in India. in pre 1990 era, manufacturing was about converting input into output. But after 1990 manufacturing has become an interrelated web of many functions and processes.
According to a study by Deloitte, India is expected to jump to No 5 by 2020 in Global Manufacturing Competitiveness Index.
Advantages of Sourcing from India
1.Labor Cost:
India has one of the cheapest labor cost in the world. in 2015 India’s labor cost stood at $ 1.72/ hour. Much lower than other countries.
2. Skilled Manpower:
Large pool of Engineers, skilled technical people with English speaking skills.
3.Legal System:
Though based on British common law, but there are significant amendments/ changes into it with time. Also the population has a faith into the legal system People own what they write.
4. Business Structure:
Like Europe, in India also many business houses are family businesses. The legal structure can be different. Also like US, the operating team of the business are professionals. We know Indian professionals are capable to take decisions and deliver.
5. Soft Power:
Indian managers work for the objectives and take pride in whatever they do. The old belief system of “Saving” is still existing. So Indian managers try to maximize the output (with min input).
6. Support from Government:
Indian government has always been supportive for manufacturing industry. The recent examples of tax reform (GST- Goods and Service Tax) and ‘Make in India’ program are just tip of the iceberg.
Factors which needs to be addressed while India Sourcing
Choosing the right manufacturer is an important business decision that requires significant research. Selecting the wrong manufacturer or factory because you are not located in India or doesn’t have resources can cost you time and money. There are certain challenges as well (of sourcing from India) but there exists ways to mitigate them as well.
Lets discuss a few here.
1. Logistics:
Though India is offering you low cost but logistics is still a challenge here. Please take measures of getting goods properly packed before moving out from factory.
2. Purchase Systems:
While the world is migrating to portal based or cloud based tools for communication with suppliers. For example many customers now place their demand over the portal, where supplier need to log in and see the demand.
SME in India is still in adoption phase. It’s better the factory to ask upfront and arrange training (if required). Once the team is trained and committed, you need not to worry.
3. Mode of Communication:
Whatsapp is very popular in India and it is being mixed for official communications also. This may cause some mis-understanding in future transactions. Its better to keep information over emails so that related parties own it.
4. Power Availability:
Power availability is still a concern. Some areas have different weekly off because of Power situation only.