China has long been the country that comes to mind when the West hear thinks of the term “manufacturing”.
However, with alarmingly rising high wages with and uncertainty from the U.S. raising tariffs against China, it’s imperative to consider China sourcing alternatives.
Different companies in South Asia are competing for the title of the world’s next manufacturing hub. Five countries being considered are Malaysia, India, Malaysia, Thailand, Indonesia and Vietnam—coined the “MITI-V” or “Mighty Five”.
These manufacturing countries have their own advantages and disadvantages. So how do you know which country is preferred for your manufacturing relocation?
- India is now a premier destination for product sourcing and companies worldwide are choosing to import from India. Advantages include remarkable infrastructure transformation, skilled workers, cultural compatibility and favourable regulatory environment – India has helped make sourcing simpler and cheaper for companies across the world.
- For companies looking to diversify their low cost country sources of supply, India seems to be an obvious choice.
- India presents to the world a profile of an emerging giant. As the seventh largest country in area and second most populous country in the world, the country’s sheer size (with low labour costs), economic weight, stable political system explains the level of attention from potential investors and corporate buyers.
- Apart from IT services, India’s vast manufacturing base includes chemical and pharmaceutical products; textile, leather and clothing; machine tools and electrical equipment. With the second largest railway network in the world and a vast coastline with established sea ports, the country is turning into a top destination for low cost, high value goods and services.
All that is required is the experience and insight to ensure that your company can establish and expand India sourcing operations strategically.
sourcing wages south asia
When comparing min wages across Asian manufacturing hubs, the average minimum salary comparisons show that Indian labour is available at 22 percent of the price of their Chinese counterparts.
Advantage India sourcing
English is an official language in India. Western manufacturers in India don’t face barriers of communication that plague those who source from China.
- Labour pool 519 million, India is poised to reach a development ‘sweet spot’
- India’s workforce will overtake China to reach 900 million by 2025
- India’s FTA with ASEAN reduced duties to zero on 90 percent of products
- Co’s like Hasbro is limiting their number of China products to half and relocate to India
Indian exports in a snapshot
The following export product groups categorize the highest dollar value in Indian global shipments during 2018. Also shown is the percentage share each export category represents in terms of overall exports from India.
1. Mineral fuels including oil: US$48.3 billion (14.9% of total exports)
2. Gems, precious metals: $40.1 billion (12.4%)
3. Machinery including computers: $20.4 billion (6.3%)
4. Vehicles: $18.2 billion (5.6%)
5. Organic chemicals: $17.7 billion (5.5%)
6. Pharmaceuticals: $14.3 billion (4.4%)
7. Electrical machinery, equipment: $11.8 billion (3.6%)
8. Iron, steel: $10 billion (3.1%)
9. Cotton: $8.1 billion (2.5%)
10. Clothing, accessories (not knit or crochet): $8.1 billion (2.5%)
India’s top 10 exports accounted for just over three-fifths (61%) of the overall value of its global shipments.
India exported more than $323 billion worth of goods in 2018.
India’s top exports are dominated by mineral products (16 percent), chemical products (14 percent) and precious metals (12 percent). Mineral products include mineral fuels and oils such as petroleum
- Chemical products include various organic and inorganic chemicals, soaps, tanning dyes, fertilizers, explosives and, most notably, pharmaceuticals. India’s pharmaceutical industry now reportedly supplies:
- 50 percent of the world’s demand for various vaccines
- 40 percent of U.S. demand for generic drugs; and
- 25 percent of all medicine in the UK
- Contributing seven percent of the country’s GDP, India’s precious metals and stones industry employs 4.6 million workers. Labour-intensive cutting, polishing and processing of small diamonds is a particularly strong sub-sector for India. Other gems, gold and jewellery are other major products in this category.
- Food and beverage products represent about 11 percent of India’s total exports, or $35 billion. Some of India’s leading exports in food and beverage include:
- Basmati rice
- Carabeef or meat of bovine animals
- Frozen shrimp and prawns; and
- Refined sugar
- The garment and textiles industry is one of India’s fastest growing. Overall textiles exports were valued at $39 billion in 2018 and are expected to more than double by 2021.
- Part of the growth comes from government initiatives, like the 2018 increase in basic customs duties from 10 percent to 20 percent on more than 500 textile products
- Another contributor is India’s robust production of relevant input materials, such as cotton, which lend supply chain and cost advantages
- These exports include knitted, woven and crocheted textiles and apparel, carpets and textile floor coverings and man-made filaments
According to September 2019 data from the World Bank,
- Among the many manufacturing locations opposing China, India is unmatched in the size of its labour force. According to September 2019 data from the World Bank, India’s labour force numbers about 519 million
- As of 2018, India’s road network spanned 5.5 million kilometres and is one of the largest in the world
- India’s government is investing heavily in strengthening infrastructure, however. The government reportedly spent US$1 trillion on infrastructure between 2008 and 2017 and plans to invest about US$1.4 trillion more in the next five years.
- India still lags far behind China in terms of Doing Business rank. But there are some relevant redeeming areas where the country has performed well or is improving. Obtaining credit, for example is easier in India. And India and China scored similarly in terms of getting electricity, paying taxes and cross-border trade.
- Continued reforms are also improving India’s ease of doing business, including:
- Eliminating certain fees involved in registering a business
- Reducing the time and cost needed to obtain construction permits; and
- Enabling post-clearance audits for cross-border trade
- The Indian Railways’ track is spread across a massive 115,000 km, making it the largest rail network in Asia and the world’s second largest network operated under a single management. The entire track covers a route length of 67,368 km. The full track length of Indian Railways can circle the equator 1.5 times
- The airports authority manages 126 Airports, including 11 International Airports, 11 Customs Airports, 89 Domestic Airports and 26 Civil enclaves at Military Airfields
- 486 total airports, airstrips, flying schools and military bases are available in the country
- 123 airports with scheduled commercial flights including some with dual civilian and army use
- 34 international airports
- Hyderabad International Airport is ranked among the world’s top ten in 2019
Our process FAQ
What are the advantages of sourcing from us
- We manage barriers of language and culture
- We ensure a smooth operational capability
- We negotiate prices and schedules locally
- We organize import, export and handle the logistic
- You benefit from our experience across India
- We help in product development, packaging and fulfilment
Competitor research & analysis
What kind of products & services do you source?
We source any product or service from commodity to specific made to order
What kind of businesses do you work with?
We work with small to MNC companies looking to procure goods and services
Do you have preferred relationships with suppliers?
We are supplier independent. We do not charge suppliers
How long does it take to fully qualify a new supplier?
To qualify a new supplier takes between a few weeks to several months
Do you help us in sampling and prototyping our products?
We do not start any manufacturing operation without approval on a developed sample. The prototypes are used to verify quality of product assembly and process. The prototype allows us to have a working base for production quality control. The prototypes cost depending on the nature of the product, material, technical implementation like a mould, develop a matrix and screens. For a simple textile product, it takes on average $100 to $200.
What are the safeguards offered?
Each manufacturing process is subject to a manufacturing contract with all technical detailing of the product or service we implement. The contract includes confidentiality agreements, manufacturing process, roles and responsibilities.