May 25, 2016
Our successful expansion into India’s largely untapped rural regions has spurred real economic growth and supported the Indian government’s Make in India initiative, established in 2014 to enhance the country’s reputation as a world-class manufacturing center. In 2016, the government announced ambitious new incentives and policies to promote investment, foster innovation, and protect intellectual property, all directed toward sustaining a highly efficient, world-class manufacturing infrastructure. This included new de-licensing and deregulation measures to eliminate bureaucratic roadblocks to increase speed and transparency for foreign-based companies looking to invest. The government also announced state-sponsored grants and rebates for small-to-medium enterprises (SMEs) while rewarding facilities that meet the country’s strong green technology standards.
This would spur business leaders from 102 countries worldwide to commit an additional 15,20,000 crores, the equivalent of over $280B, to investment projects during Make in India Week, an all-time high. Strengthening India’s manufacturing sector is essential for growing the country’s annual GDP and addressing the major socioeconomic gap within the country’s rural population. Up to 60% of its total population is currently dependent on farming, but agriculture only contributes one-seventh of its annual GDP. This means, on average, a farm family lives on one-fourth the income of an urban household. This initiative represents an important step toward solving this income inequality problem. The government knows its economic strength in the modern age is directly tied to expanding attractive manufacturing opportunities into underserved rural areas.
Rural India’s Manufacturing Sector
In 2011, we had to improve our manufacturing operations. Our primary facility, in Chennai, India, where more than 1K workers assemble custom magnetics, high-mix RFID solutions, PCB assemblies, and more, was affected by a noticeable shift in labor demographics. While urban workers in Chennai, with a 4.4M population, steered away from machine or assembly labor, a significant number of our employees lived far outside the city limits. Providing company-sponsored transportation for these workers was proving to be an expanding overhead cost, while many were growing tired of the lengthy daily commute and began seeking other employment options. As we anticipated a struggle in recruiting production operators to support our growth, a few of our team members suggested we consider a smaller manufacturing plant in the state’s rural area where a fresh pool of workforce might be more accessible. At first, we were skeptical whether these outer regions could provide the necessary resources: workforce and infrastructure to deliver world-class technology products.
After lengthy internal discussions, we decided to take the plunge and set up a small experiment in Bargur, a rural town of 12K, about 150 miles east of Chennai. Our initial skepticism quickly yielded to excitement as we saw everything fall into place. Our first foray into rural India proved to be a great success. Despite some early concerns, we quickly leased a facility from an enthusiastic property owner who helped us bring the plant to our specifications for high-precision electronics manufacturing. We next recruited local workers who were anxious to learn new job skills. We also solved the commute issues for many existing employees from the Bargur area, bringing their jobs closer to home. Due largely to our workforce’s dedication and passionate work ethic, we overcame multiple challenges to rapidly establish a highly productive facility that has become an integral part of our company operations. From the Bargur plant’s modest start with 250 employees, we now employ over 600 there today.
Backed by 40 Years of Expertise
We contribute our 40 years of design and manufacturing expertise spanning multiple diverse markets. We look forward to discussing how we can deliver world-class products for OEMs across the globe. We understand our home Indian market, familiar with its vast regulatory and selling environments. We foster growth opportunities within India through our strong technology incubation ecosystem. We also assist global OEMs in entering the Indian market by leveraging the local supply chain and favorable operating environments for cost reductions.
Our flagship Chennai location opened in 2006 and lies within a Special Economic Zone (SEZ) for electronics manufacturing, offering economic incentives for imports and exports. This primary facility is within 90 minutes of the Chennai seaport and 20 minutes to the international airport. Additional road and rail connectivity links to the rest of India and beyond and infrastructure advantages with faster import and export clearances. We also have labor force flexibility, both technical and manual, to scale to demand rapidly.
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