India has emerged as one of the fastest growing economies in recent years and with the help of its technological developments it has proved its metal in the global market. After Apple, Netgear a hardware manufacturing company has now announced that it will start manufacturing in India by 2020. The company manufactures routers for business enterprises and high-end consumer segments.
The US based company is exploring opportunities to invest in India and will start manufacturing units according to its CEO Patrick Lo. The decision to shift the manufacturing hub from China is in light of the trade war going on between China and the United States of America. Lo said, “We are looking at opportunities to see whether we would be able to harness some of the manufacturing sites in India to shift our manufacturing capacities from China,”. Netgear has multiple manufacturing locations in China, Vietnam, Indonesia and Thailand and all of them are third party manufacturers. He further added, “We are looking at whether we could made India the fifth location and gradually use India to replace China entirely”.
The company is looking for a third party provider such as the Foxconn in Chennai and in multiple other locations across the country. The high tariffs that Trump government has imposed on the products exported from China, caused great loss to manufacturing companies. The manufacturing companies assemble parts of their product in China which finally is despatched to the huge American market. However, since the tariffs have been increased to almost 25% by the US government, companies have not been able to maintain a high profit margin. With 70% of the markets in Canada and the USA, Netgear accounts for about 15-20 % market share in the Asia Pacific region. According to the CEO of Netgear, India has an exciting market for the company.
Earlier, Foxconn Technology Group Chairman Terry Gou said that the iPhone will go into mass production in India this year, a shift for the largest assembler of Apple Inc.’s handsets that has long concentrated production in China. India has become the fastest-growing smart phone market in the world, while China stagnates and Apple loses share to local competitors such as Huawei Technologies Co. and Xiaomi Corp. Apple has been a minor player in India, in part because of its high prices, but local manufacturing would help the Cupertino, California-based company avoid import duties of 20%.
It is evident that companies are now looking beyond China, and considering India as one of the most potential manufacturing hub. Recently the financial express reported that around 200 companies are looking to shift their manufacturing base from China to India. It reported that the US-India Strategic and Partnership Forum’s president Mukesh Aghi said that companies are consulting them about procedures to set up manufacturing units and investing in India, to create an alternative for China.
Aghi said , “I think that’s critical. We would advise to bring more transparency in the process and to make it more consultative because in the last 12 to 18 months, we are seeing US companies look at some of the decisions being made, either e-commerce or data localisation, as more domestic-oriented than global”. He also mentioned that the Indian government should accelerate the reforms and make the process transparent. He emphasised on the fact that the investments will create more jobs and hence new and innovative ways should be carved out to attract more and more investments.
The credits are also given to the government’s “Make in India” initiative which gave a strong boost to the manufacturing sectors in the country. It not only increased the efficiency of the indigenous industries but also provided lucrative opportunities to the companies outside India to establish their manufacturing units.
India’s manufacturing industry is growing efficiently and companies deciding to establish their manufacturing units are a proof of India’s growing manufacturing strength. The government has made efforts to provide the companies with an operational environment. Gaining benefits from the US-China trade war, India is on the path of establishing itself as an important destination for investment by manufacturing giants.