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Proudly Making in India, Selling Across the World

Low production costs and high talent drawing manufactures to India

Published: 31st August 2014 06:00 AM  |   Last Updated: 30th August 2014 11:21 PM   |  A+A-

manufactures

Prime Minister Narendra Modi’s call to global firms to “come, make in India” and for local manufacturers to “dream of ‘Made in India’ products” may seem ambitious. But it’s not mission impossible. Because both local and global players are set on the ‘Made in India, with pride’ path already. The US-based tractor and agricultural products maker John Deere set up a manufacturing facility in India back in 1999. As the country’s largest tractor exporter, it now sends out India-made products to 75 countries. India is also the care of address for global computer makers Dell and Lenovo, consumer electronic giants Samsung, LG and Panasonic, automakers Hyundai, Volkswagen, Ford and BMW—all of whom ‘make in India’. Homegrown players like Mahindra & Mahindra, Godrej, Marico and Videocon too export locally-made products. The Chennai-based TVS Group, which is a leading supplier of automotive components, prides itself on its India-made products. While many of its 50 companies have made a name for themselves on the quality front, five have won the Deming award for total quality management. “India is the most competitive destination with lowest cost of production. Above all, we have the best engineering talent in the world,” says Venu Srinivasan, chairman, TVS Motors. He should know; the company’s exports grew by 30 per cent last year.

‘‘INDIA SHINES WITH GOOD-INFRA, WORKFORCE’

In late 2011, something strange happened. A Chinese soft toys and accessories company, Pals Plush Ltd, entered India. Chinese companies coming in to sell cheap products in India is nothing new. But Pals Plush set up a production unit at Sri City SEZ, in Andhra Pradesh, and started manufacturing and exporting Made-in-India toys to US and European customers like Disney and Hasbro, and international stores such as Sears and Dillards. It said it was motivated not just by India’s lower costs but also by its “superior infrastructure and abundant manpower”. According to company director Seema Nehra, the company is ramping up manpower from 300 workers operating on 120 sewing machines to 1,500 workers and 500 machines by the end of 2014.

1.JPGIn 2013, BMW Motorrad, the two-wheeler unit of BMW, tied up with TVS Motor Company to roll out ‘Made in India’ bikes in the below 500-cc category. The bikes are to be sold across the world and are scheduled to hit the market in the second half of 2015.

Japan’s Isuzu Motors too is gearing up to roll out its first ‘Made-in-India’ light commercial vehicle in 2016 from its greenfield manufacturing facility at Sri City. The company is investing Rs 1,500 crore at the facility, which will have an initial capacity of 50,000 units, of which 20 per cent will be exported.

Availability of labour and skilled engineers, economies of scale in manufacturing and strong growth potential in domestic market attracted automakers to India. Perhaps that’s why Europe’s largest carmaker Volkswagen sells the India-made Vento across three continents and Nissan exports the locally-built premium sedan Sunny and hatchback Micra.

2.JPGEven Honda Cars India, which is not big on exports, sells a few thousand cars overseas from its plants in Greater Noida and Tapukara in Alwar, Rajasthan. “We have been in India since 1999, investing Rs 6,000 crore so far, and we indigenise almost 90 per cent of our cars,” says senior vice-president Jnaneswar Sen.

Like the car companies, consumer electronics players like Samsung, LG, Panasonic, Haier too say they are in India owing to the advantages in infrastructure, economies of scale and workforce. “We have started exporting ACs and washing machines from India starting from 2014,” says Manish Sharma, MD, Panasonic India. The company now expects to increase exports to Middle East and Africa from the current 5 per cent to 20 per cent next year.

Do these products require different packaging or marketing for export markets? Not at all,” says Pals Plush’s Nehra. ‘We define and design every product for global customers.”

WORLD CLASS SELLS ANYWHERE’

For Mahindra & Mahindra’s (M&M) Pravin Shah, Indian products have always been considered “value-for-money” rather than cheap. “Our products come with appropriate technology designed to cater to customers in mature markets at competitive price points,” says the chief executive of M&M’s Automotive Division & International Operations. The division is responsible for exports of 6-7 per cent of the company’s total tractor production (excluding China and the US). The Mumbai-based business conglomerate also exports its flagship product Scorpio, besides XUV 5OO and Xylo. 

4.JPGAccording to industry experts, more than the country of production, people prefer brands and the origin of the brand itself (for example Nike from the US, Louis Vuitton from France) that reflect a particular lifestyle. “It (‘Made-in...’ label) is fairly unimportant. People go by brands, quality and relevance and their lifestyle since everything is anyway made in China, India or somewhere else in Asia,” says Dilip Kapur, president, Hidesign, adding, “Hidesign has been clear as to its Indian origin as a brand and we produce great quality for the luxury brands.” No wonder, Hidesign gets 30 per cent of its sales from exports.

Not that it’s all hunky-dory for Indian companies. Marketing premium quality products overseas can be tricky. “It is tough to market Indian brands unless you connect to an international lifestyle. That’s why we target ‘intellectually travelled and aware’ working professionals who are similar across the world,” says Kapur, stressing that one need not produce tailor-made products suiting overseas customers if you design world-class products and target the right audience.

3.JPGLeading automobile maker Tata Motors is one company that has seen one of its Indian-made products fail in India but succeed overseas. The world’s cheapest car, Nano, failed to connect with customers in India both due to design and safety issues, but found acceptance in Europe, owing to its economical nature and compact design (which is different from Indian version). This fiscal, the company has an aggressive product line-up for the African market including Tata Indica and Tata Vista from the hatchback range, and Tata Indigo and Tata Manza from sedans. It already has presence in South Africa, Thailand and Argentina, UK, South Korea and Indonesia.

“The key is to target specific markets based on consumer behaviour, distribution networks and where there’s an established supply chain,” says Ranjit Yadav, president Passenger Vehicles, Tata Motors.



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