Key takeaways
- Start with the process and the drawing, then find the cluster that runs that process every week.
- Logistics is part of the product cost, not a separate decision made after the price is agreed.
- Supplier depth matters more than the number of suppliers: you need a second source that can actually run the part.
- Score regions on the same criteria, then verify the shortlist with a site visit and a trial order.
Start with the part, not the map
The most common mistake in Indian sourcing is to pick a city first and look for a supplier second. A region is only useful if it runs your process routinely. A machining cluster can make a stamped part, but it will not have the die shop, the press capacity or the strip handling that a stamping cluster has.
Write down the process route before you look at a map: material, primary forming, machining, heat treatment, finish, assembly and test. Then find the regions where most of those steps are already present. The fewer steps that travel between towns, the shorter the lead time and the lower the risk of a handover failure.
Judge capability depth, not headcount
A cluster with many suppliers is not automatically deep. Depth means several firms can run the same process to the same standard, with the tooling, gauges and approvals that your part needs. It also means a second source exists for the finishing steps, which are often the bottleneck.
Ask three questions of any region. Can it make the part? Can it inspect the part to your drawing? Can it repeat the part next quarter? A region that passes the first and fails the others is a prototype location, not a production base.
A useful test is to ask for a similar part the region has already shipped. If several suppliers can show a comparable part, the process is routine. If none can, you are asking the region to learn on your programme, which may be acceptable for a prototype and expensive for production.
- Primary process available in more than one firm
- Special processes such as heat treatment and plating nearby
- Metrology that matches the tightest tolerance on the drawing
- Tool room and die or mould maintenance on hand
- Evidence of repeat production, not only samples
Put logistics in the model early
Every inland cluster has a port leg. Coimbatore and Bengaluru move goods by road to a port, Delhi NCR uses an inland depot and rail, and Gujarat and Mumbai have shorter port access. The leg has a cost, a transit time and a risk profile that changes with the monsoon and with congestion.
Build the route into the landed cost before you compare piece prices. A region with a higher piece price and a short port leg can beat a cheaper region with a long, unreliable leg. Use a forwarder quote for the actual route, not a national average.
Also check the sailing frequency. A port with a weekly service and a long cut off can be harder to plan around than a port with two weekly services. For small consignments, the consolidation option may matter more than the headline freight rate. Ask the forwarder for the door to port time at the 90th percentile, not the best case.
| Criterion | Weight | What good looks like |
|---|---|---|
| Process depth | 30% | Two or more firms can run the full route |
| Quality evidence | 20% | IATF or ISO scope, calibration and first article |
| Logistics | 20% | Short inland leg and a reliable port or airport |
| Cost | 15% | Landed cost per good part, not piece price |
| Capacity and risk | 10% | Spare capacity, power backup and a second source |
| Engineering support | 5% | Drawing review and change control |
Illustrative weights only. Adjust them to the part, the volume and the consequence of failure.
Compare cost on a landed basis
Piece price is the start of the comparison, not the end. Add freight, duty, clearance, inland delivery, financing and the cost of quality. Then divide by the good parts received. A region with cheap labour and a high reject rate can lose to a region with higher labour and a stable process.
Energy and water also belong in the model. Some processes, such as heat treatment and plating, are energy intensive, and a region with an unreliable supply may need a generator and a higher cost per part. Ask how the plant manages power cuts and whether the backup covers the process you are buying.
Currency is the last line. A quote in US dollars or euros shifts with the exchange rate, and a long programme can move more than the piece price difference between two regions. Agree the currency basis, the review date and the hedging approach before you sign.
Match the supplier size to the programme
A small job shop can be the right choice for a low volume part with a simple route. It gives attention and flexibility. A larger plant is better for a programme with a launch curve, a PPAP requirement and a change process. The mistake is to ask a small shop to behave like a tier one without paying for the overhead.
Consider the tier structure. A tier one firm manages sub suppliers and carries the quality system. A tier two firm may do the process work at a lower cost but needs more support from you. Choose the tier that matches your own engineering and quality capacity.
A second source is a capability, not a name on a list
A second supplier that has never run the part is not a real backup. Qualify it with a trial order before you depend on it.
Check regulation and environment
Regions differ in environmental enforcement, labour rules and industrial land policy. A plating or coating supplier needs a current consent and a waste handling plan. A plant in a dense city may face transport restrictions or limits on generator use. These are not abstract risks; they can stop a shipment.
Ask for the consent, the last inspection record and the plant's plan for a restriction period. For a region with seasonal air quality rules, such as Delhi NCR in winter, plan a buffer and keep the finish route flexible. For a coastal region, check the monsoon pattern and the drainage at the plant.
Score, shortlist, then verify
Use a simple scorecard with weights agreed before the review. Score each region on the same evidence, not on impressions from a trade fair. Keep the notes and the source for each score so the decision can be defended later.
Then verify the shortlist. Visit the plant that will run the part, meet the quality contact and ask for a trial order. A trial is the only way to test the handovers between casting, machining, plating and packing. If the trial passes, agree the inspection plan and the change process before volume.
- Scorecard with weights agreed in advance
- Site visit to the actual line, not the sales office
- Trial order with a first article and a capability check
- Named second source with a qualified process
- Landed cost per good part for each option
- Written change and escalation process
Revisit the choice when the inputs change
Freight rates, duty, energy cost and supplier capacity move. A region that was the best choice at the request for quotation may not be the best choice two years later. Review the scorecard when the volume changes, when a port route changes or when a supplier loses a key customer.
Keep the model alive with dated assumptions. That turns a one-off sourcing decision into a plan that can adapt without a full re tender.
Frequently asked questions
Which region in India is best for manufacturing?
There is no single best region. The right choice depends on the process, the tolerance, the volume and the port route. Match the part to a cluster that runs that process routinely, then compare landed cost and quality evidence.
How important is proximity to a port?
It matters, but it is one line in the landed cost model. A short port leg with a poor schedule can be slower than a longer road leg. Compare total door to port time and cost, not distance.
Should I choose a large supplier or a small one?
Match the size to the programme. A small shop suits low volume and simple routes. A larger plant suits a launch curve, PPAP and formal change control. Neither is automatically better.
How do I test a new region before committing?
Use a scorecard, visit the actual line, and place a trial order that covers every step in the route. Check the first article, the capability on the critical feature and the packing before you agree volume.
Sources and further reading
- World Bank, Logistics Performance Index, https://lpi.worldbank.org
- International Chamber of Commerce, Incoterms 2020
- Ministry of Micro, Small and Medium Enterprises, Udyam registration portal, https://udyamregistration.gov.in
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