I think you will agree that the Indian subcontinent is extraordinarily interesting from a global sourcing perspective. Yet it is also one of the less easily accessible locations for a variety of reasons. These include geographical size, multiple languages and cultural diversity to name only a few.
In this article we explore the top 7 Indian manufacturing hotspots that you should know if you consider sourcing industrial products from India, and how they evolved.
Rapid Economic Progression
The Indian economy escalated directly from an agriculturally oriented nation to a service oriented nation and mostly bypassed the industrial / manufacturing revolution.
This unique switch about the Indian economy has had a lot to do with culture and behaviour. But more importantly, the big changes in the economic policies were brought about by then finance minister Dr. Manmohan Singh in 1991.
Even today manufacturing stands at a modest 17% of the Indian economy. Considering India’s abundance of mineral resources and human talent, its role with respect to manufacturing is subpar. Particularly as it excelled in other sectors like information technology.
Emergence of Hotspots
From the early 1980s the Japanese conglomerates of Suzuki and Honda drove the first revolution of India’s manufacturing industry in the National Capital Region (NCR). This development triggered the emergence of further regional clusters around the country where the provision of raw materials and human capital coincided.
Local giants like the Tatas and Mahindras played large roles in the formation of relevant talent pools. These supply the industries with a workforce that is knowledgeable in the art of manufacturing.
We refer to these regional manufacturing centers as hotspots. They are characterized by the availability of all necessary resources for a particular branch of industry. This includes machinery, talent, toolings, testing resources, raw materials and experienced people, along with packaging, warehousing and logistics infrastructure.
Today’s Top 7 Manufacturing Hotspots
There are 7 main manufacturing hotspots that we consider essential to understand the structure of India’s manufacturing industry.
Precision Machinery: Bangalore, Pune
Bangalore and Pune are well known for high precision machinery. With companies like Hindustan Aeronautics, ISRO, Festo, Toyota, Honeywell, Cummins, ACE designers and more, the density of precision machining companies is unusually high in these regions.
Automotive: Pune, Haryana, Chennai, Aurangabad
Pune and Chennai compete for the title of “Detroit of India”. Almost all major Indian, Korean, and German automotive brands are located in these areas, whereas Suzuki settled in the region of Haryana.
Sand Casting: Kolhapur, Coimbatore, Belgaum
India ranks 3rd largest casting producer in the world. Estimated output exceeds more than 9 million mt of various grades of casting in 2018. The majority of sand casting companies are small to medium scale. They particularly concentrate in the regions of Kolhapur, Coimbatore and Belgaum.
Investment casting: Rajkot
Investment casting is driven by heavy labour, energy and raw materials. The majority of the small and medium scale investment casting companies are located in the region of Rajkot.
Valve and Components: Hubli, Coimbatore
The regions of Hubli and Coimbatore accomodate a cluster of valve companies. Here you find noteworthy American behemoths like Honeywell, Flowserve plus domestic giants like Microfinish.
Forging: Ludhiana, Pune
The art of forging is a very specific demand of the automotive industry. Therefore the majority of forging companies established in Ludhiana and Pune. That puts them in close proximity to automotive clusters around Haryana and Pune.
In addition to its sand casting profile, the Belgaum region registers as a hotspot for hydraulic components. To insiders it’s a well known fact that hydraulic components from Belgaum are even exported to China. This in itself proves the cost competence.
Making Procurement in India Accessible
We at DheWish identify and organize these hotspots. We empower them with digitization following the German Reference Architecture Model Industrie 4.0 (RAMI 4.0 in short). One of our main objectives is to provide small and medium scale suppliers of India an international platform, both technically and commercially. By digitizing and upgrading their factories to international standards we qualify them to connect to European consumer industries.
Working with these hotspots of India offers a unique blend of business advantages.
Organised resources: All relevant resources like machinery, talent, experience, raw material, tools and supporting infrastructure are available in these locations.
Tax benefits: The government of India offers tax breaks to Indian suppliers that work with European companies.
Cost effective procurement: India offers a very efficient cost reduction platform with its cheap labor, low energy and low overhead costs.
Intellectual property: As a functioning democracy India offers appropriate protection and confidentiality to your intellectual property.
Big market: Along with procurement benefits, India offers an excellent new market base. The world’s 5th largest economy has growth rates averaging between five and eight percent.
DheWish makes these advantages conveniently available to European companies. Furthermore, we deploy technology to establish a level of transparency along the supply chain as yet unseen. Our proprietary online platform, specially designed and developed for sourcing projects of engineering companies, and the use of virtual reality are examples of such technological applications.
India is not just a country of vast size and population. It is also a country of enormous opportunity for doing business. Companies that manage to capitalize on these opportunities efficiently will likely improve their competitive position. The political and macro-economic developments and narratives around China only strengthen the assessment that the next decade can become an “Indian decade”.
But seizing these opportunities does not come without hurdles and pitfalls. Therefore, we believe the reasonable course of action is to minimize the risks of market entry and seek the help of an experienced partner.
DheWish is one such option. We offer instant connectivity to India’s major manufacturing hotspots with essentially zero risk to the buyer. Our customers enjoy the reliability and ease of business with a German partner. As they benefit from buying at Indian price levels.
Authors: Padmaraj Pattanashetti, Steffen Türoff