Why are Companies Choosing to Manufacture in India

The Covid-19 pandemic has triggered a global recession and greatly disrupted many companies’ supply chains. The victims include the technology and automobile industry, as well as many others. Companies like Jaguar and Land Rover felt the economic effects of the pandemic all the way from their UK to Chinese markets. Moreover, Samsung decided to move some of its production to Vietnam a few years ago, and they are now establishing large-scale production infrastructure in India.

This emphasis on outsourcing which often leads companies to develop a dependency on China, coupled with a pandemic that is disrupting global supply chains, is presenting many challenges for the world economy.

India is the primary low cost sourcing and manufacturing country in Southeast Asia. Meanwhile, countries like Vietnam are developing more manufacturing infrastructure to keep up with a growing interest from international firms to manufacture there. Vietnam is also struggling to build adequate transportation infrastructure to enable commerce, as it struggles with congested roads and ports.

Given the increasing demand for manufacturing abroad while avoiding a dependency on any one country, India is emerging as an alternative low cost sourcing country to China.

Advantages Of Manufacturing In India

Low labor costs is one of the main advantages of international sourcing. Certainly, many overseas suppliers and manufacturers offer their services at an extremely competitive price, especially in low cost regions like India.

Aside from the substantially lower prices, other things can tip the scale in respect to deciding to manufacture overseas in a country like India. Some examples include:

  • the accessibility of excellent technology and hardware
  • access to specific research tools, design expertise, or skilled labor
  • the access to raw materials that may not be available elsewhere
  • manufacturing efficiency that is hard to find
  • rigorous quality control
  • access to potential strategic partners and business talent

Manufacturing in India is on the rise. India’s demographics illustrate that it produces one of the highest number of engineers of any country in the world. Most importantly, these engineers are educated in progressive working methods and labor practices. They are also known to have a strong expertise in operating some of the most modern mechanical equipment in the world.

Communication is more straightforward for most Western companies as most engineers in India are bilingual, with English being a prominent language.

Automotive Manufacturing in India

India became the fifth largest vehicle retail seller in 2019 with sales reaching 3.81 million units. It was the seventh largest producer of economical vehicles in 2019. The industry has received a Foreign Direct Investment (FDI) credit of $24.21 billion between April 2000 and March 2020, according to a report provided by the Department for Promotion of Industry and Internal Trade (DPIIT).

Casting Manufacturing in India

Casting formulation in India reached 11 Mn tonnes in 2018 and is expected to increase at an annual growth rate of approximately 12.7% from 2018 until 2023. The automobile industry accounts for around 40% of castings formulated in India. As of 2018, aluminum castings comprised around 15% of the total casting formulation in the country.

CNC Machining

The term CNC stands for ‘computer numerical control.’ It commonly involves working with computerized controls and machine tools. India is uniquely positioned to offer CNC machining services at a competitive price as it excels in executing each part of the machining process efficiently. The market size is expected to grow by $1.9Bn from 2019 – 2024 at 13% CAGR.

Custom Manufacturing

India is best known for its manufacturing work for specific product categories. This has led some to assume that the country only has a niche range of manufacturing offerings but this is not actually the case.

A broad and constantly developing variety of products are being produced in India today. These product categories include:

  • Machinery
  • Furniture
  • Electronics and Hardware
  • Apparel
  • Pharmaceutical Products

For more information on sourcing and manufacturing from India, click here.

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