IS INDIA THE NEW ELDORADO OF THE AUTOMOTIVE INDUSTRY FOR OEMS AND SUPPLIERS?

Amid evolving economic dynamics, the U.S. has recently embraced a "friendshoring" strategy. The Biden administration has been encouraging American companies to move their manufacturing operations to friendly nations, with a focus on the Asia-Pacific region, which includes India.

Why does India show promise as a future manufacturing hub?
India's economic potential is enhanced by several key factors that promise sustained growth and development. Over 65% of the country’s population is under age 35, thus providing a dynamic workforce that can drive productivity and innovation, if adequately skilled. Technological advancements, spearheaded by the government's Digital India initiative and a burgeoning startup ecosystem, are propelling India towards a tech-driven future, enhancing efficiency across sectors.

Infrastructure development through initiatives like Bharatmala and Sagarmala are improving connectivity, reducing logistical costs and attracting foreign direct investment. Reform-oriented policies including the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) have streamlined the business environment making India more attractive to investors.

The "Make in India" government initiative aims to position the country as a global manufacturing hub, thus creating jobs and increasing exports. Education and skill development programs like Skill India and the New Education Policy (NEP) are crucial for leveraging the youthful population's potential. India's strategic location and increasing economic influence allow it to benefit from global trade dynamics, further boosting its prospects.

Key challenges to be solved by India in order to be the next Eldorado for OEMs and suppliers
Two major issues have been identified and need to be addressed to match or surpass China’s manufacturing prowess. First, the reduction of import taxes and tariffs that currently inhibit cost competitiveness and profitability. Streamlining these taxes would not only make India a more attractive destination for manufacturing but also encourage foreign investment and local production.

Second, enhancing supply chain efficiency is crucial. Despite India's aspiration to become a developed economy by 2047, its infrastructure remains inadequate. Ageing infrastructure, characterized by outdated machinery, results in high maintenance costs, reduced productivity and frequent equipment breakdowns. Limited automation further exacerbates inefficiencies, slowing down production speeds. Compounding these issues are inventory management problems, where demand variability, sluggish response times and inadequate supply chain visibility create persistent challenges. Supplier-related obstacles also hinder smooth operations. Delayed deliveries disrupt production schedules, quality concerns with raw materials compromise product standards and safety, and fluctuating prices of raw materials erode profitability.

Although manufacturing in India appears to be a promising strategy for industrial companies, those setting up in the highly populated country might need support. A well-established local quality expert such as the TRIGO Group, a leader in quality solutions, can help streamline production chains with a unique advantage: our mobile experts can intervene within 48 hours to address local quality or supply chain issues with proven methodologies.