The balancing act
Conceptually thinking, the vendors will have to opt for ‘Make in India’ products. The conditions now in India being favourable for a manufacturing, it is time for purchase to look at local vendor development to make international quality products. Technology transfer, joint ventures and access to finance are being make easy by the Indian government.
Already there are several companies which have set up their base in India. But a few feel that the quality of Indian products does not match with the foreign standards. Even the service providers prefer international products rather than the Indian ones.
Speaking from the facility management end, M.K. Padmanabhan, COO, Faber Sindoori Management Services Pvt. Ltd, feels that the fluctuation of dollar-rupee rate has not impacted their sector as yet, as they have a contract with most of the vendors. “The dollar rate has not made an impact on the consumables and chemical purchases. But if the dollar rate goes beyond Rs75-80, one may see a 4-5% change in price.
“The good news for Indian Manufacturers the block in the import provision has resulted in adding up more on the Indian products to be used. Make in India product consumption will be more, and if the quality improves, people’s approach in utilizing the product will also increase. Companies like Diversey, Charnock, Roots, etc., are using raw materials from India itself and producing it.
“Indians have a mindset for giving importance to foreign goods. If the same quality and appearance are given to the product ‘Made in India, the mindset would change.
“There are a lot of good Indian products available locally that are better than international brands. India is a huge market, even 2-3% of the market trend will make a huge impact into the revenue margins to any manufacturer or the provider.”
In India, the entire supply chain management is a process to unite vendors and ask them for quotes, review the products and finalize. There is not much time invested made on investigating the quality of products and custom-made manufacture. Vendor development is almost non-existent in India. Hence, when there is fluctuation, even if there is a 0.5% difference it is a serious impact. This is a big blow with the difference in the dollar rate which has never happened in India.
Companies are facing massive problems trying to do a balancing act, because they have already purchased, and when they make the purchase order they are making it for the time ahead. There is a 90 days lean period to pay. In that time if the dollar rate increases, the day of the payment will be at the current dollar cost. The lean period of 90 days for payment has to be reduced.
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At the end of the day it can affect both the service provider as well as the manufacturer. Because the manufacturer will not be able to make it with certain cost in what they were incurring it in and they will pass the load to the supplier as well as to the clients.
– M.K. Padmanabhan
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Perhaps if a purchase and the payment is made in the same month, neither the seller or the buyer is at risk of facing this fluctuation in the international currency.
The fact remains that India has a fast-growing economy. This situation is likely to continue for a period. However, by fast tracking local vendor development and producing indigenous products of international quality, the possibility of the situation getting altered for the better or a complete change could become a reality.
Yash Sama
