India as a manufacturing center behind other developing countries, mainly due to problems in infrastructure and government regulation. Despite the obstacles, some multinationals are attracted to India's low-cost high-tech workforce and are the first to enter India. Multinationals that consider India as a manufacturing base should focus on high-technology industries to take advantage of a large number of high-quality Indian engineers. MNCs that currently source and manufacture in India can gain first-mover advantages such as establishing close relationships with best-of-breed vendors, securing the best talent and government support. India is a leader in offshore back office services, but as a manufacturing hub, India lags behind China, Thailand and the rest of Asia (Table 1). Outdated causes are numerous: Multinational corporations operating in India must overcome unreliable electricity supplies, poor roads, blocked seaports and airports. To make matters worse, multinationals also struggle with government policies that hinder employment and curb demand in many industries in the country. These obstacles are numerous but this has not deterred multinational manufacturers building factories in India. Moreover, it is not by chance that these companies choose India. All companies are highly technology-intensive and require advanced technical expertise - and this is where India can become a major outsourcing and manufacturing base. McKinsey believes that the next wave of global manufacturing outsourcing wave will focus on those technology-intensive industries. In addition to automotive parts and assembly, these industries include metal products, machinery, pharmaceuticals and telecommunications equipment. More than half of manufacturing processes for U.S. companies offshore offshoring are technology-intensive, and the ratio will rise to 70% by 2015. In India's manufacturing output, high-tech industries account for nearly 40%, India has the full advantage of absorbing some of the high-tech outsourcing. First, India offers a large number of engineering and technical personnel: as many as 400,000 engineering students graduate from India each year, second only to China's 490,000. The increase in the number of reliable suppliers in India and the size of the domestic market may attract companies to settle in India (as well as other developing countries) in order to avoid severe domestic price pressures. For example, LG plans to take advantage of India's rapidly growing demand for handsets to make handsets in India. Car makers in developed markets for auto parts must deal with the dual pressures of reducing costs while innovating. On the one hand, they are going to develop new and expensive features to please consumers while raising environmental and safety standards; on the other hand, the basic price of a car will not increase in the coming years. Various factors have prompted companies to procure more parts from cheaper parts. According to McKinsey analysis, under this trend, the total outsourcing of auto parts industry will increase from 65 billion U.S. dollars in 2002 to 375 billion U.S. dollars in 2015. McKinsey believes India can secure $ 25 billion of its total outsourcing and is a leading global outsourcing base with China, Mexico and Thailand. With a long history of manufacturing in India and a well-developed higher education system, India's auto parts industry has technological advantages in the areas of process, product and equipment engineering in addition to its low cost. India's process technology can be applied to the reorganization of production processes to make the process more labor-intensive and less capital-intensive, thus significantly reducing the overall cost of MNCs. For example, "de-automated" production processes used in Western plants reduce the overall manufacturing costs of some components by up to 20%. In product design, India has the advantage of reducing costs through design. For example, MarutiAlto's steering system was redesigned to reduce its weight by 15%. Engineers in India are also able to design products quickly, helping to reduce development costs and lead times. For example, an Indian supplier in just six months designed a steering system for a car manufacturer who, after spending more than four years in other low-cost countries, co-developed a similar system with a local supplier . Many automakers are starting to set up engineering and design centers in India to take advantage of local skills. In the field of equipment engineering, the advanced processing and machine tool industries in India make it possible to manufacture equipment locally (cheaper). After a leading Japanese carmaker relocated equipment design and procurement to India, it found that local costs were 20% lower than other developing countries. And because Indian programmers and designers are "cheap," up to 85% savings can be realized in India if the company buys second-hand capital equipment and rebuilds it in-house. Almost all global automakers now have parts in India. India's total exports of automotive components (including exports of multinational component suppliers) have been growing at an annual rate of 25% over the five years from 1998 to 2003, currently amounting to more than $ 1 billion annually. However, multinational corporations still need to use other means to expand their success in India, including investing in developing suppliers, establishing dialogue with the government to foster relationships, providing advice on regulatory issues, developing competent Indian managers with the capacity and authority to discover And solve problems on the ground.
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