Sourcing From India
After the Covid-19 pandemic, there has been a massive shift in the global supply chain scenario. Companies that used to source their products from overseas markets began looking for alternatives to bridge supply gaps. In this regard, India emerged as a viable alternative.
Due to its vast consumer market, developing infrastructure, and expanding logistics sector, sourcing from the Indian market has become the preferred choice among foreign firms.
Why is Sourcing from India Beneficial for Foreign Companies?
Foreign organizations can get multiple benefits by sourcing from the Indian market. Some of them are as follows:
- Availability of Skilled Workforce
A large portion of the Indian population consists of youth, who have high technical expertise. Thus, there is the availability of a skilled workforce, which can provide a high level of flexibility and cost efficiency. This enables manufacturers to leverage different technology which can enhance and scale their production process.
- Favorable Government Policies
The Indian Government has introduced several policies which enable manufacturers to scale their business. For example, the “Make in India” initiative aims to promote innovation and investment in order to create state-of-the-art infrastructure. It was also an initiative by the government to encourage businesses to manufacture products locally.
Apart from this, there are several other policies like “Ease of Doing Business”, “Industrial Corridor Development Program”, “National Logistics Policy”, etc., which will accelerate India on the road to becoming a global manufacturing hub.
- Trade Agreements with Several Nations
India has Free Trade Agreements (FTAs) with over 13 nations. This facilitates cross-border import and export with reduced or no government tariffs, prohibitions, subsidies, or quotas. The following countries /regions enjoy trade agreements with India:
- India-Sri-Lanka Free Trade Agreement
- the agreement on the South Asian Free Trade Area (SAFTA)
- India-Nepal Treaty of Trade
- India-Bhutan agreement on trade, commerce, and transit
- India-South Korea Comprehensive Economic Partnership Agreement (CEPA)
- India-Japan CEPA
- India-Malaysia CECA
- India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA)
Apart from the free trade agreements, India has also signed 6 limited coverage preferential trade agreements (PTAs)-
- Asia Pacific Trade Agreement (APTA)
- Global System of Trade Preferences (GSTP)
- SAARC Preferential Trading Agreement (SAPTA)
- India-MERCOSUR PTA
- India-Chile PTA
- Strategic Location
The Indian subcontinent is located at the head of the Indian Ocean. This sets the country at the center of the trans-Indian Ocean routes, which facilitates a connection with both East Asian and Western nations.
Thus, foreign businesses planning to conduct product sourcing in India can get their goods shipped to any part of the world with ease. However, to facilitate it, partnering with the right vendor development services provider is a must.
- The Vast availability of Raw Materials
In India, there are vast reserves of natural resources. Thus, most of the essential raw materials like metals, wood, cotton, jute, silk, etc. are readily available. This enables manufacturers to reduce their production costs and offer their end products at competitive rates.
- Low Labor Costs
Thanks to its growing population, India has ample labor resources. Thus, in comparison to other developed nations, the labor costs are low. This serves as a huge benefit for suppliers as they can manufacture products at lower prices. As a result, foreign companies can sustainably source products from this market to sell them in their target areas.
Things Businesses should keep in mind while Sourcing from India
Here are some things that businesses must keep in mind while sourcing from the Indian market:
- Explore Both Online and Offline Sources
In order to source the best products from the Indian market, exploring both online and offline options is essential. By doing so, businesses can find the appropriate manufacturers which can provide goods that will match their consumer’s preferences. Additionally, it is an excellent way to find a wide variety of products, which can help expand their current line-up.
- Take Note of your Supplier’s Limits
One of the most important factors that companies should determine before sourcing products from India is the supplier’s limits. In the case of businesses that deal in seasonal products, there might be a need to increase supplies during certain times of the year. Under such circumstances, if the current supplier is unable to meet the demand, organizations must partner with another manufacturer to bridge the supply gap.
- Ask if the Seller provides Drop Shipping
Drop shipping is a very convenient feature that is offered by most Indian manufacturers. It involves delivering the products directly to the customer, without the company having to deal with the hassles of handling and shipping. Moreover, it is a superb way for businesses to increase their profit margins.
- Always have a Backup Plan
There may be times when the chosen supplier has issues delivering products. It can be due to labor strikes, accidents, financial constraints, and various other factors. Under such circumstances, being in contact with a second manufacturer really helps. This can help keep the supply chain stable till the former resolves its issues.
- Establish Partnerships with Indian Manufacturers
One of the best ways to sustainably source products from the Indian market is to enter a partnership with a local firm. This will ensure strict quality control as per the client company’s expectations and also help them establish a long-term trade relationship.
- Take Help From a Management Consulting Firm
Realistically, for a foreign organization to do all the above all on its own, can be quite challenging. It will also need to employ additional manpower and resources to successfully get the job done. In this regard, partnering with a management consulting firm can be of great help.
These companies have experts who have in-depth knowledge of the industry’s best manufacturers and the rules and regulations involved in building partnerships with them. Thus, hiring such firms can be a cost-effective solution to manage such tasks.
How Tecnova can help Foreign Companies?
Tecnova is one of India’s top product-sourcing companies for foreign entities. It has a stringent supplier selection process that involves evaluating manufacturers based on their product quality and production process. Moreover, the firm has over three decades of experience in successfully setting up sourcing operations for its foreign clients.
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