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International Companies- Leveraging opportunities in the Indian market for Engineering Equipment.

Published :July 2024

This article explores a few of specific opportunities for international companies in the Indian market.

1- Sourcing opportunities

India's export of engineering equipment and components has seen remarkable growth in recent years. *In FY24, the exports of engineering goods stood at $109.32 billion, reflecting a 2.1% year-on-year growth. Key drivers for this growth include strong demand from markets such as the United States and Europe. For instance, the value of engineering goods shipped to the US was $17.63 billion in FY24. Exports to the European Union are also substantial, with continued demand for Indian engineering products.

Thanks to major Indian and Global Automotive companies who have established manufacturing operations in India and the large European multinational companies who have been present in the Indian market for many decades, India has a highly developed Small and Medium Enterprises (SMEs)which *contribute around 45% of India's total exports, encompassing various sectors, including engineering equipment and components.

Many large and mid-sized international manufacturing companies who have presence in India have been using SMEs in India, not only for domestic production, but also as sources for global manufacturing operations.  For many such companies, some of these suppliers from India are ‘single source’ globally for some of the critical components.

Sourcing engineering components and equipment from Indian SMEs can be a cost-effective and strategic decision for many international companies due to India's growing manufacturing sector, skilled workforce, and competitive pricing.

Here are some opportunities and key points to consider:

1. Diverse Manufacturing Capabilities
2. Cost Advantages
3. Skilled Workforce
4. Availability of raw materials
5. Capability to comply with international Quality Standards
6. Infrastructure and Strategic Location with 13 major sea ports and ten international airports
7. Favourable government policies

Key Considerations

1. Supply Chain Management
   Establish a clear supply chain strategy to handle logistics, customs, and address potential delays.
2. Local Sourcing set up
   Identify and work with local sourcing partners or consultants who understand the Indian SME echo system. One may later on set up own sourcing office in India if required.
3. Supplier Verification
   Conduct onsite due diligence through reliable consultants/ third party agencies to verify the credentials and capabilities of potential suppliers including their financial standing.
4. Quality control and Inspection at source
   To begin with, implement stringent quality control processes to monitor production and ensure consistency. Use third-party inspection services to ensure compliance with the specifications and standards. Later, periodic audits to ensure process compliance will be sufficient.

Key Sourcing Hubs in India

1. Pune: For automotive components and components for industrial equipment.
2. Chennai: For automotive components, machinery, and electronics.
3. Bengaluru: For electronic components.
4. Mumbai: For industrial machinery and electrical components.
5. Gurgaon: For automotive components.

*Source: Engineering Export Promotion Council

For more discussions on consultation on this topic, please connect with joseph.chaly@camsconsulting.in / www.camsconsulting.in