German interior solutions provider Häfele is setting ambitious goals for its operations in India, aiming to increase local sourcing to 50% in the medium term. South Asia Managing Director Frank Schloeder disclosed the company’s plans to gradually develop its supplier base while considering a manufacturing unit to produce items currently made in Europe. This venture is expected to involve investments amounting to “hundreds of crore of rupees”, with a focus on fostering a supplier park to support future export ambitions.
Häfele India, which currently reports a turnover of ₹1,200 crore, anticipates tripling its business in the next six to seven years. However, the company faces obstacles, including a lack of robust policy frameworks within the furniture industry. Schloeder noted additional challenges from the upcoming quality control order for hinges, set to take effect on 1 January 2025.
Discussing the company’s shift towards local production, Schloeder revealed, ‘Until now, sourcing from India was less than 10%. By December next year, we aim to achieve nearly 30% “Make in India”. From there, the mid-term goal is to surpass 50%, and we’ll evaluate further developments accordingly.’
Historically, 90% of Häfele’s components were imported from various regions, with China serving as a key source. Schloeder, however, emphasised that Häfele has maintained a diversified supply network, saying, ‘We are less reliant on China compared to other companies.’
Addressing the rationale behind outsourcing the majority of its production, Schloeder explained, ‘Häfele is not a conventional manufacturing company. Globally, we produce less than 10% of our consumption internally.’ The company’s extensive portfolio includes home appliances, partitions, furniture fittings, and faucets, supported by a wide-ranging supplier base across numerous geographies.
When asked about setting up manufacturing operations in India, Schloeder confirmed, ‘We plan to establish our own production facilities here, mirroring the 10% of our global production we currently manage in Europe. Initially, this will cater to “India for India”, but with a vision of “India for the world” in subsequent phases.’
The development of a supplier park is also central to Häfele’s strategy. Schloeder explained, ‘We intend to create a facility where international suppliers, particularly from Europe, can co-locate and manufacture with Häfele in India. This approach will allow us to harness localisation cost benefits, making these products competitive in other global markets.’
Regarding investment plans, Schloeder remained cautious about specific figures but suggested the capital expenditure would run into several hundred crore rupees over five to six years. Including supplier investments, the total could reach four-digit figures.
Häfele’s growth trajectory in India reflects significant potential. ‘Currently, our ₹1,200-crore turnover represents exponential growth achieved over the past decade. We’re optimistic about India’s development and foresee our business tripling, if not quadrupling, within the next six to seven years,’ said Schloeder. The country ranks as Häfele’s third-largest market after Germany and the United States.
However, Schloeder acknowledged the volatile nature of the Indian market. ‘While the overall trend is upward, market fluctuations resemble stock price movements. It’s a challenging environment, but we remain confident in our projections.’
The company’s progress is tempered by regulatory challenges. Schloeder highlighted the short compliance window for the new quality control order on cabinet hinges, noting, ‘Although we support quality controls that encourage competitive manufacturing in India, policies aimed at curbing imports from specific regions can create significant difficulties, especially where local manufacturing remains underdeveloped.’ Despite these challenges, Häfele remains optimistic about its long-term prospects in India, leveraging its strong supplier network and investment in local production to meet growing domestic and global demand. Courtesy: https://www.interiordaily.com/article/9690818/hafele-aims-to-boost-indian-sourcing-and-expand-supplier-base/