Atmanirbhar Bharat: Why business localization is a win-win proposition for all
The 'Make in India' initiative has been in focus and adopted by various industries for some time now. However, as global businesses look to diversify their supply chains, the spotlight is back on the government's 'Atmanirbhar Bharat' (Self-Reliant India) campaign.
Localisation can truly bear fruit when industries and government come together to keep pushing forward this agenda. Various efforts by the government, such as the Skill India program, the Ease of Doing business policies, Production Linked Incentive scheme, focus on Foreign Direct Investment, etc. are all steps in the right direction. By combining the government and industry efforts, everyone stands to win. Below outlines some of the benefits.
Benefit to Customers:
For Indian customers who choose products manufactured in India, the benefits are multifold. To begin with, products designed or engineered in a country are aptly suited for their home markets as they are developed and tested in local conditions. This can help qualify a product as a 'best-in-class' in its category. Second, due to local manufacturing, customers (intermediary or end use) can expect faster deliveries as importing sometimes comes with delays driven by travel times and lengthy documentation processes. Thirdly, taxes, duties, and costs on imported goods can result in the local product being competitive from a price point of view, allowing the buyer to appreciate value pricing.
Benefit to Companies:
Local manufacturing enables a great deal of flexibility which allows cost efficiencies, control over quality, faster turn-around times in terms of production, transportation, deliveries, etc. Additionally, localisation can not only save production costs but can also cut down logistics costs and delivery times. Manufacturing locally helps India's industries grow and its talent pool to develop specialised skill sets. Such scale and diversity drive companies to innovate.
Localisation can be the gateway to further opportunities such as export growth, import substitution, and contract manufacturing. Developing economies of scale, focusing on quality, maintenance of foreign country compliances, investment in R&D and technology, and right pricing can help accelerate India to a new level of competitiveness and scale.
Benefit to the Country:
The benefits of localisation at the country level are multifold. First, it helps to boost the economy and the lives of people. India has the world's largest population of youth at an employable age. This makes for a great opportunity for the country to supply a workforce to its industries.
Employment puts spending power into the hands of people, which in turn can help the economy. Another benefit comes from the development that occurs in an area/region with the setting up of operations. Localisation enables knowledge sharing and tech transfer with other countries, lending the home country access to the latest global technologies too. Overall, localisation assists in raising the standards of the lives in the country/ area.
The growth in localisation of manufacturing not only allows a country to be self-reliant but also position itself as a manufacturing hub for other countries. That said, localisation facilitates a nation to build on its export capabilities and strengthen other sources of revenue.
Localisation - benefiting the vertical transport industry:
According to a 2019 CBRE report - titled India 2030 - Exploring the Future, as of 2018, nearly 34% of India's population resided in the cities; this number is expected to increase to 40% by 2030. As cities continue to expand and infrastructure proliferates, elevators and escalators are a main part of the narrative. To support this demand for elevators and escalators, major industry players have turned towards strengthening their localisation. For example, Otis India's manufacturing facility in Bengaluru has been serving India's people-moving market since it opened in the mid-nineties. In 2020, the facility was awarded the Indian Green Building Council (IGBC) gold rating.
Such localisation has brought in the world's best-in-class technology, enabled knowledge sharing, tech transfers, and skilling of our people, and brought in value-added products to Indian shores. This has also put India on the global stage as companies source talent here to develop innovation for the global market.
With greater government support and industries' combined efforts, India will surely reap the numerous benefits of localisation in years to come.