Unlocking the Commercial Benefits of Sourcing from India: A strategic advantage for European and US Companies
Introduction to India and the strategic Sourcing Opportunities
In recent years, the global sourcing landscape has witnessed a significant shift. European and US companies that once relied heavily on China for their sourcing needs are increasingly turning their attention to India. This shift is driven by a combination of geopolitical factors, cost advantages, and India’s growing reputation as a manufacturing hub. For companies considering this move, the benefits extend far beyond cost savings; establishing a sourcing strategy in India can lead to improved supply chain resilience, access to a diverse supplier base, and enhanced business growth.
As a global sourcing company with extensive experience d offices in developed and emerging sourcing markets across Asia both China and India, we’ve seen firsthand the advantages that India offers.
India creating a roadmap to become the World’s manufacturer
India is a place of superlatives. It’s home to the world’s fifth-largest economy. Its population, at over 1.4 billion people, has surpassed China’s to become the largest in the world. And that population is young: at a median age of 27.6, Indians are on average more than ten years younger than the citizens of most other major economies.
In 2024, India also held the world’s largest democratic elections, in which 642 million people cast their ballots. Now that a new national government has been sworn in for a five-year term, its leaders have renewed their commitment to several economic goals. The government is expected to unveil its specific plans in July as part of its annual budget, including the following:
- achieving 8 percent GDP growth each year in the next decade and growing India’s GDP to $19 trillion by 2047
- creating 90 million jobs by 2030 and 600 million jobs by 2047
- investing about $600 billion annually to transition to a net-zero world by 2050
- raising income sixfold to over $12,000 per capita
ET2C International Strategic Sourcing and Procurement Specialists
We are a leading Global Sourcing company with over twenty years’ experience working with our global clients to make their sourcing simpler. Our team of over 200 colleagues are based in seven offices in key international sourcing markets across Asia.
We work with our clients to make their global sourcing simple, becoming their bridge to their supply partners. Where time zones, language, business communication expectations or QC can become challenging. ET2C Corporate Profile
Our team of experts can help you build and deliver your sourcing strategy and ensure you are working with the right factory partners. Giving you independent feet on the ground and confidence with fast responses, removing time zone and language challenges. If you would like to explore sourcing opportunities or see how we have worked with clients to manage risk, quality and compliance across their supply chain.
Please message us at contact@et2cint.com we would be happy to share some examples of how we work.
The Shift in Global Trade from China to India: Why Now?
Geopolitical and Economic Considerations
The trade tensions between the US and China, along with concerns over tariffs, have prompted many Western companies to rethink their reliance on China. Additionally, the COVID-19 pandemic highlighted the risks of over-dependence on a single country for global supply chains. India, with its stable political environment and pro-business policies, has emerged as a strong alternative.
Cost Competitiveness
While China has long been the world’s manufacturing powerhouse, rising labour costs have eroded some of its cost advantages. India offers a more cost-effective solution, particularly in labour-intensive industries such as textiles, apparel, and consumer goods. The country’s large, young workforce is another factor contributing to its competitiveness.
Government Incentives
India’s government has implemented various initiatives to attract foreign investment and boost manufacturing. The “Make in India” campaign, for example, aims to transform India into a global manufacturing hub by providing incentives such as tax breaks, subsidies, and streamlined regulatory processes. These initiatives make India an increasingly attractive destination for companies looking to diversify their sourcing strategies.
Benefits of building a Strategic Sourcing plan in India
Diverse Supplier Base
India boasts a diverse range of industries and supplier networks, making it an ideal destination for companies in search of varied products and services. From textiles and apparel to electronics and automotive components, India offers a wide array of sourcing opportunities. This diversity can help companies reduce risk by spreading their sourcing across multiple industries and suppliers.
Quality and Innovation
India has made significant strides in improving the quality of its manufacturing output. Many Indian manufacturers have adopted international quality standards and are investing in advanced technologies to enhance their production capabilities. Additionally, India’s thriving tech sector is driving innovation across industries, offering opportunities for companies to source cutting-edge products and services.
Supply Chain Resilience
One of the key lessons learned from recent global disruptions is the importance of supply chain resilience. By diversifying their sourcing strategies and incorporating India into their supply chains, companies can reduce their vulnerability to disruptions in any single market. India’s strategic location, coupled with its improving infrastructure, makes it a reliable partner in global supply chains.
Cultural Affinity and Language Advantage
India’s long history of trade and cultural exchange with Europe and the US, combined with its widespread use of English, makes it an easy market for Western companies to navigate. This cultural affinity facilitates smoother communication, negotiation, and collaboration with Indian suppliers, reducing the potential for misunderstandings and ensuring more efficient operations.
Establishing a Buying Office in India: Amplifying the Benefits
Local Expertise and Market Knowledge
Setting up a buying office in India allows companies to tap into local expertise and market knowledge. A dedicated team on the ground can provide valuable insights into the local business environment, supplier capabilities, and market trends. This local presence enables companies to make informed decisions, negotiate better deals, and quickly address any issues that arise.
Enhanced Supplier Relationships
Building strong relationships with suppliers is crucial for successful sourcing. A buying office in India allows companies to establish and maintain close connections with their suppliers, fostering trust and collaboration. This proximity also enables companies to monitor supplier performance more effectively and ensure that quality and delivery standards are consistently met.
Faster Decision-Making and Responsiveness
Having a buying office in India streamlines communication and decision-making processes. The team can quickly respond to changes in demand, market conditions, or supplier performance, reducing lead times and enhancing overall supply chain agility. This responsiveness is particularly important in industries where market conditions can change rapidly.
Cost Efficiency and Scalability
While setting up a buying office requires an initial investment, the long-term cost savings can be substantial. A local team can help companies negotiate better prices, reduce logistical costs, and identify cost-saving opportunities across the supply chain. Additionally, as your sourcing needs grow, the buying office can scale its operations to manage increased volumes, ensuring that your sourcing strategy remains efficient and effective.
Risk Mitigation
Operating in a foreign market comes with inherent risks, from regulatory changes to supply chain disruptions. A buying office in India acts as a risk management tool, allowing companies to proactively address potential issues and navigate the complexities of the Indian market. By staying informed and engaged, the buying office can help mitigate risks and ensure the smooth execution of sourcing activities.
The Value Proposition: Partnering with a Global Sourcing Company
ET2C specialize in helping European and US companies successfully transition their sourcing strategies to India. With over two decades of experience in global sourcing, we understand the challenges and opportunities that come with entering new markets. Our team on the ground in India is equipped to provide end-to-end support, from supplier identification and negotiation to quality control and logistics management.
By partnering with us, you can leverage our extensive network of trusted suppliers, benefit from our deep market knowledge, and ensure that your sourcing strategy is aligned with your business goals. Whether you’re looking to diversify your supply chain, reduce costs, or enhance product quality, we’re here to help you achieve your objectives.
Conclusion: Starting your Indian Strategic Sourcing Program
India is fast becoming a preferred sourcing destination for European and US companies, offering a compelling combination of cost advantages, quality manufacturing, and supply chain resilience. By moving your global sourcing to India and establishing a buying office, you can unlock a host of commercial benefits that drive business growth and competitiveness.
At ET2C we’re committed to helping you navigate the complexities of sourcing from India and maximizing the value of your sourcing strategy. Our team on the ground in Delhi can help you to deliver your Indian sourcing program.
Contact us today contact@et2cint.com to learn more about how we can support your business and help you succeed in the global marketplace.
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