Outsourcing to India: how to find the right manufacturing partner
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India has become one of the most important manufacturing centres in the world in the past ten years. The Indian government has invested heavily in the development of the industrial sector, with the result that the Indian automotive, aerospace, IT and pharmaceutical sectors (think of vaccines) now produce for the entire world. In addition, India offers access to a wide range of raw materials and the costs are lower than in China. In this article, we discuss how you can find the right manufacturing partner for your business in India.
Finding the right manufacturing location in India
Many companies see India as one country, but India is incredibly large and diverse. India can be better approached as a continent, like Europe. In order to find a good manufacturer, it is therefore smart to do or have a thorough location analysis done. India has production clusters in which companies from a specific sector are located. There are multiple clusters of each sector in the states where the best materials, infrastructure and personnel can be found for this industry. For example, the automotive industry has four large clusters in Gujarat and around the cities of Chennai, Pune and New Delhi.
Companies should not focus blindly on these clusters, but examine all possibilities throughout India. Sometimes the options outside these clusters are more advantageous, for example because wages outside the cities are lower. Once it has been determined which locations meet the requirements, a list can be made of potential suppliers and producers in these regions.
An Indian manufacturing partner with experience
In order to be able to guarantee the desired specifications and quality, a potential supplier must have the right expertise and experience within the sector in which the European company is active. In addition, it must be checked whether quality systems are used, what the annual output is and whether the supplier has sufficient experience with the export of the product. If you have little experience with doing business in India, it is advisable to hire a local consultant for this step. They know exactly which legal requirements products must meet and which permits are required to produce and ship your products.
Quality control
From the list of potential candidates, the three to five best options for the sector and the product are selected after an extensive evaluation. With these producers, the European company then goes into more detail about the possibilities that the producer offers. In this step, it is advisable to plan a visit to the production facility, or, if a visit is not possible, to organize a video call to get an even better idea of the working method and the quality of the products that are manufactured there. Once the selection has been reduced to 1 production company, a quote can be requested so that the price and conditions can be negotiated. Please note that a factory in India usually looks different than in Europe. This does not mean that the products that are delivered are of lesser quality. Often the factories in India are simpler, and there is no air conditioning, for example, but the machines are of the same caliber as in Europe.
If there is an agreement with the producer on the price and conditions, samples can be made. It is important that the European company has people available in India who can check the manufacturing process and the quality, before this is checked again in Europe. If everything is to your liking, the first batch can be manufactured. Although the new supplier has already been screened in various ways, it is then advisable to have quality controls carried out every year or even more frequently.
Protecting your Intellectual Property
When outsourcing your production to a partner in another country, you want to be sure that your intellectual property (IP) is well protected. India has been a member of WIPO (World Intellectual Property Organization) for almost 50 years, which means that most intellectual property laws in India comply with international standards. In our IP manual you can read not only how your intellectual property is legally protected in India, but also what you can do and have recorded yourself to protect your IP if you are going to work with an Indian partner.
