About opportunities, process costs, quality and commitment when “importing to India”.
Is India an attractive procurement market? A comment from WB market solutions®, the specialist department of Dr. Wamser + Batra GmbH for all questions about the Indian procurement market.
For thousands of years, traders from the West had traveled to India to purchase valuable goods (products from the Orient were far superior to those from Europe in terms of technology and craftsmanship until the Industrial Revolution). From the 16th century, spices in particular were imported to Europe via the newly discovered sea route. With the colonization of India, other raw materials such as cotton and tea were exported on a large scale and world trade really gained momentum.
Today, India exports more than $300 billion worth of goods and services annually, almost a fifth of it to the European Union. In addition to IT services, India's most important export items are oil derivatives, gemstones & jewelry, textiles & clothing, agricultural products but also machinery, vehicle parts, metal goods as well as chemical and pharmaceutical products (generics).
Although India is generally not considered a typical manufacturing location like China, for example, it has become an integral part of global value chains in certain areas. Compared to other low-wage countries, India can particularly score points in sectors where research and development are needed in addition to production. “Therefore, many German companies today also use India as a procurement market to purchase technologically sophisticated semi-finished and finished products.”said Mike D. Batra, Managing Director of the WB Group.
Significant overhead when purchasing in India
Indian manufacturers can of course produce labor-intensive products more cheaply thanks to significantly lower wage levels. However, this cost advantage is far from being fully realized. This is not only due to the additional costs for logistics and customs, but also to the process costs, which are usually significantly underestimated. Procurement activities in India involve a relatively high amount of effort. Supporting suppliers and quality assurance cost a lot of time and money.
While larger companies based in India usually carry out these processes with their own employees, smaller companies like to rely on independent auditors and procurement experts such as Dr. Wamser + Batra GmbH back.
Ensuring quality when importing
Indians are often said to have a lower quality awareness. This is mainly due to the fact that there is no German-style skilled worker training in India. In addition, manufacturing facilities do not always have the prerequisites for high-quality production.
Internationally recognized certifications offer an initial starting point when it comes to assessing the performance of a potential new supplier. Many buyers therefore often decide to carry out their own checks before importing and to actively participate in the design of the supplier's processes. Among other things, it is important to ensure that quality requirements are met throughout the entire supply chain, including by sub-suppliers.
About commitment and meeting deadlines
“In India, adherence to deadlines is typically the second major challenge alongside quality. On the one hand, this is due to the generally more flexible approach to time. In addition, there are difficult conditions for transport and logistics.”, says Dr. Johannes Wamser, co-managing director of the WB Group. The transport infrastructure is not sufficiently developed in many areas, and the inconsistent tax system makes transport across state borders difficult. This higher level of uncertainty means that on-site companies have to work with larger time buffers and generally have to be more adaptable as the project progresses. Despite the best contract, you will never be able to completely rule out these import problems. A cooperative approach and an open communication policy with your supplier or importer will help you to at least receive the right information in a timely manner.
We can determine your procurement potential in India for you identify possible suppliers. We also have German technicians on site in India who can evaluate, support and supervise your potential and existing suppliers. In order to be able to carry out audits or to support you with your own auditing and quality assurance processes, we have our own certification and quality experts (former TÜV employees).
