Melissa & Doug had a situation. For decades, the American toy brand had leaned heavily on factories in China to make its products — wooden puzzles, stuffed animals, play mats. Suddenly, that course looked risky.
It was February 2021, and the world was besieged by a pandemic. Lockdowns disrupted Chinese factories. Trade hostilities between Washington and Beijing were undermining the benefits of depending on plants in China. President Donald J. Trump had slapped tariffs on a broad variety of Chinese imports, increasing their prices, and President Biden extended that policy.
Melissa & Doug was eager to shift some production to other countries. Which explained the arrival of its chief supply chain officer at a factory in Greater Noida, a fast-growing city about 30 miles southeast of the Indian capital, New Delhi.
The factory was owned by a family business called Sunlord. The Melissa & Doug executive was surprised to see that the plant could make high-quality wooden toys, at prices comparable to those in China. Late last year, Sunlord completed its first batch of products for Melissa & Doug, a modest order of about 10,000 items, and now is cranking out 25,000 per month.
“What they want is 20 to 30 percent of their production being done in India,” said Sunlord’s director, Amitabh Kharbanda. “India has a lot of positive vibes right now.”
In a global marketplace reshaped by volatile forces — not least the animosity between the United States and China — India shows signs of emerging as a potentially significant place to manufacture products. Multinational brands that have for decades relied on Chinese factories are expanding to India as they seek to limit the vulnerabilities of concentrating production in any single country.
The shift to India could make the global supply chain more resilient, reducing its susceptibility to shocks. It could also boost fortunes in India, which missed out on the manufacturing boom that lifted hundreds of millions of people from poverty in East Asia — first in Japan, South Korea and Taiwan, then in China and, more recently, in Thailand, Indonesia and Vietnam.
Though roughly one billion people are of working age in India, the country has only 430 million jobs, according to the Center for Monitoring Indian Economy, an independent research institution in Mumbai. And most of those who are counted as employed endure a precarious existence as day laborers and farmhands. Growing exports could be a source of new jobs — especially for women, who have been largely shut out of the formal working ranks.
India’s manufacturing growth remains nascent and tenuous. In its nearly 80 years as an independent nation, the country has typically been ruled by stultifying bureaucracy, ardor for self-sufficiency and disdain for international trade.
Prime Minister Narendra Modi has altered that perception, winning plaudits from business leaders for streamlining regulations and championing industry. But this has produced more speeches than paychecks: Manufacturing makes up only 13 percent of India’s economy, a lower share than a decade ago, when Mr. Modi took office. His authoritarian bent and demonization of India’s Muslim minority stoke doubts about his leadership, risking social strife that could undermine the country’s appeal. Read more.. Courtesy: https://www.nytimes.com/2024/06/26/business/india-us-manufacturing.html