Recent economic conditions and geopolitical strain have encouraged manufacturers to lessen their reliance on their Chinese factories. Many companies are exploring a “China-Plus-One” approach, which involves maintaining a presence in China while also expanding into other locations. India is becoming a popular destination in those expansion efforts.
“More and more manufacturers are expanding production to India for its cost-effective and educated workforce, its attractive government incentive programs and its massive consumer market,” Dimerco Express Group said in a recent white paper exploring the logistics of manufacturing in India.
India’s population — and its designation as the most populous country in the world — is one of its biggest advantages. The sheer number of people in India contribute to both the nation’s plentiful workforce and its huge consumer market.
“We have close to 1.24 billion people in India, and 50% of them are under the age of 25,” Rajesh Srinivasan, India Country Manager of Dimerco Express Group said. “People under 35 make up 65% of the overall population. India can offer an abundant skilled or semi-skilled workforce for at least the next 20-plus years.”
By contrast, China is one of the most rapidly aging countries in the world. With current citizens growing older and the country’s historically suppressed fertility rates, companies do not have the same promise of an available labor force moving forward.
“China has one of the fastest-growing aging populations in the world,” according to the World Health Organization. “The population of people over 60 years old in China is projected to reach 28% by 2040.”
In addition to its young population, India’s adult literacy rate is over 80%. The country also has a high percentage of English-speaking residents, which is attractive to companies hoping to avoid communication breakdowns.
Unlike a lot of Southeast Asian countries, India is also already well connected to the rest of the world. The country boasts 13 major sea ports and 34 international airports.
These qualities — combined with attractive government incentives — are a big draw for manufacturers looking to secure a robust and promising future for their operations. This is especially true for companies working in specific tech-driven industries.
“The Indian government is putting big money behind its ‘Make in India’ initiative,” according to the Dimerco white paper. “There are many government programs focused on promoting consumer electronics, semiconductor and EV manufacturers. And they are working. For example, the electronics manufacturing market in India will grow 32% yearly through 2025.”
(Image: Dimerco)
While these opportunities are attractive for manufacturers, Dimerco warns manufacturers against trying to establish a production hub quickly at the expense of doing their due diligence. India offers a wealth of opportunities for companies, but getting started can be complicated.
Indian policies and regulations –– especially Customs policies –– are more complicated and layered than those in China and much of Southeast Asia. Without solid expertise, navigating these policies and procedures can be both time-consuming and expensive.
“Indian Customs and duties are pretty complex compared to other countries. It can be very difficult for foreign investors to understand the processes,” Srinivasan said. “It is much wiser to work with a partner to help navigate the complexities of market expansion.”
In its white paper, Dimerco outlined a list of qualities manufacturers should look for when choosing a partner for their India expansion. Those qualities include:
Knowledge of the incentive and tax deferral schemes available.
Help with establishing a presence in India prior to having a legal entity there
Ability to help set up a company — with assistance from a certified CPA firm.
Help with licensing requirements and registering with various government departments.
Good understanding of India’s Customs processes and how they differ from port to port.
Experience with Customs duty payment management.
Fluency in your chosen language.
“Establishing operations [in India] can be complex. If your expansion strategy is not well planned, you risk significant delays and unhappy customers,” Dimerco wrote in its white paper. “So push on with your India expansion plans, but do so judiciously and with the help of a knowledgeable logistics partner that knows the market and has significant experience supporting international expansion initiatives.”
Dimerco prides itself on connecting Asia to the world. The company has an established presence in India and is well prepared to help companies navigate the logistics and regulatory challenges involved with an expansion into the country.
Click here to learn more about Dimerco.
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