Essential Factors to Consider While Sourcing from the Indian Market

The contract manufacturing and raw materials segments in the Indian market is bolstering as foreign investors are choosing global sourcing company as partners to facilitate the expansion procedure. Moreover, to get valuable insight into all prevailing trends, foreign firms use the knowledge of product development and sourcing companies in India. These firms provide guidance on stabilizing relationships with suppliers and other mediators in sourcing and removing the procurement process’s hindrances. However, since the Indian economy is diverse and mixed in nature, it is pivotal to understand varied factors that influence sourcing activities in the market.

Factors to Consider while Sourcing from the Indian Market

Last few years, the global supply chain management sector has experienced disruptions due to economic and environmental threats. Due to this, India’s sourcing activities and other nations faced stagnancy for some time period.

However, with the Government’s initiatives, various global sourcing companies consider India a promising sourcing destination. Since India is a diverse economy, here are a few common factors that a product development and sourcing company in India consider while sourcing from this market:

• Finding Appropriate Supplier

The diverse economic market of India makes it a daunting task for sourcing companies to allocate appropriate suppliers. Hence, to cater to the requirement based on the raw materials, foreign firms hire the service of a global sourcing company that develops extensive procurement strategies to identify the right set of suppliers. Moreover, it is important to check other sub-factors like production capability, quality management, and easy accessibility before closing a deal.

• Supplier Management And Communication

Building a solid relationship with suppliers and maintaining transparency on the company policies are necessary. As these are the few first steps toward adding value to supply chain management. Raw material suppliers do not deal with one company; hence proper communication on the delivery timeline, quantity to be delivered, and place should be conveyed properly. Sourcing from India becomes a lot easier if proactive procurement teams are set up to handle all challenges faced during the process.

• Trade Rules & Regulations

For product development and sourcing company in India, abiding by the trade rules and regulations laid by the Indian Government for uninterrupted flow of operation is essential. In India, understanding different trade laws can be challenging work for foreign companies, which is why global sourcing companies in India are offering assistance in dealing with the following paperwork. Maintaining this paperwork will not only initiate practices of fair trade but also save the global company from any future litigations.

• Product Quality Management

One of the significant factors to contemplate before sourcing from India is the quality of products to be procured. No matter what product is being sourced, one cannot compromise on the quality of the product. There are numerous challenges involved like a difference in time zone, geographical barriers, and cultural hindrances while carrying on a process of expansion in the international market. For this reason, it is recommendable to wisely select a sourcing partner who helps to meet business and quality expectations and strives continuously to establish sustainable long-term relationships with the end-users by delivering quality products.

• Understanding the Global Trend

India is slowly on the verge of becoming a global supplier of various raw materials for the international market. Over the years, the Indian market has gained popularity as a sourcing destination due to its fair trade policies, diverse consumer and supplier market, IT innovation and development, and many more. In addition, the relationship between foreign countries and India has strengthened through the global procurement processes and the Government’s initiatives. This not only bolstered the global trade level but also provided competitive advantages over a large economy.

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Reason for Indian Market being a Lucrative Sourcing Destination

To incorporate active sourcing strategies, it is crucial to understand various reasons behind India being a profitable destination for sourcing.

• One of the key reasons is the low labor costs – the cost-effectiveness in the Indian market is now attracting many manufacturing companies in the USA and Europe to source from India. This enables an overall high return on investment.

• The Government’s support to promote exports since liberalization offered relaxation in many trade laws and policies in the country. According to the current report, export in India increased by 22.36%, which is USD 291.80 billion in the last financial year.

• India became one of the fastest and largest growing economies in the world for its constant development and innovation in IT. The inception of advanced infrastructure and the latest technology made sourcing from India an easy affair.

Government Policies in International Export

Various Indian Government schemes like the “Make In India” movement are increasing export volume in the country. According to the Economic Times, here are a few following schemes to ensure a surge in foreign exchange:

• Rebate in GST

Under the GST Act, the Government of India offers rebates to exports on specified output products or services.

• Duty-free Import Authorization

To ensure duty-free imports, the Indian Government process merging with Duty Exemption Entitlement Certificate and Duty-Free Replenishment Certificate.

• Zero Duty Schemes of Export Promotion Capital Goods

The benefits of this scheme under the Indian Government apply to all exporters of electronic devices or appliances.

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Role of Manufacturing and Raw Material Consulting Firms

The role of a manufacturing and raw material consulting firm or a product development and sourcing company in India like Tecnova in developing sourcing strategies is evolving from time to time. These companies not only provide assistance in understanding this market but also perform various functions like:

• Identifying the right supply chain and dealers suitable for products• Allocate new opportunities and develop sourcing strategies accordingly

• Comprehends this competitive market and takes necessary steps to clear other challenges.

• Hires the appropriate partners and procurement team to grow the business

• Prepares documents by understanding the trade laws of a country

• Maintains strong relationships with all suppliers and other stakeholders

• Directs supply chain management to ensure delivery of quality products within a timeline.

Sourcing from India can be complex sometimes; however, the global sourcing partners make the entire process seamless and accurate. The transparency maintained at each procurement level helps establish an enduring impression and builds a strong relationship with customers and partners. India, after liberalization, has become a renowned market with its diverse culture, product availability, and straightforward regulation. These grounds ensure India is a strong sourcing partner, offering advantages to the international market.

‍Reference

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