“Secondly, there seems to be a large unorganised market where the gloves are being traded wherein transaction are made without bills evading taxes that are levied on these products. Again this keeps the prices of these gloves lower than what we can offer.”
“The duty and insurance alone comes up to 30%, freight cost is another 10-15% in addition to other clearance charges. In all, a total of approximately 40-45% additional cost makes the product extremely expensive. Secondly the importer has to procure goods in high quantity to reduce freight cost for which there is also need to stock up for a longer period,” adds Anjana.
Adding to this, Samarth says that considering the cost in the form of customs/import duty, there will certainly be some cost reduction in the basic cost of the product when you make in India.
It could be the other way too, says Nadeem. “Sometimes due to taxation and instability in raw material rate, homemade high quality product would be costlier than import from Europe. In case of business in bulk import could work out to be cheaper than local manufacturing.”
“To source any material from Europe is expensive. Very few people do so. India has numerous trade agreements with ASEAN countries and Sri Lanka, where there are duty rebates. Importers take advantage of this,” says Philip.
“Even if we produce high quality products comparable to European standards, our costs will be much lower than those manufactured in Europe,” explains Samir Sabu, Director, Soma Specialities Pvt. Ltd., an indigenous single disc scrubbers manufacturer. “This is due to two reasons: Frugal Indian Engineering and lower labour costs in India. However, our costs can be brought down further if we can increase automation of our production processes and production volumes like the Chinese companies can. “But the larger Indian manufacturers also have to charge additional taxes to their customers which makes their products more expensive,” he adds.
The Indian buyer’s conception that one should only pay for international or “imported” material, also adversely affects margin levels, Vinay Ruparel, Director-Innovision Hygiene, points out.
“If there are no proper margins, manufacturers do not get to enough spend money on R&D, which is most essential to stay ahead of competition. Moreover, margins are necessary for any company to reserve X% of its turnover for improvisation.”
Cost of labour is one main aspect of difference between Europe and India. Further to that, “Generally, when we compare apple to apple, we find a huge difference in costs. Our cost can be anywhere between ½ to 1/6 the costs of European machines. This is particularly true of products oriented towards industrial high performance, high durability levels,” says Samarth.
Timely Delivery
The time factor in product and spare delivery is crucial in this industry, especially in the service segment where a delay of even a single day lapse entails heavy penalty.
“Serving customers much faster and timely supply of required machines and spare parts, is always possible being a manufacturer,” asserts Varun. In case of international products, the spare parts are expensive and are not stocked. “There is a waiting period involved for the parts to get shipped from abroad,” says Varun.
“Yes, there is no waiting period of 45-60 days between order placed and delivery. There is no custom duties, no payment terms and there is no need to buy as per MOQ of overseas manufacturers with Indiamade products. One can buy any requirement at any point of time from the Indian manufacturers,” says Naresh.
“Customers with even basic technical knowledge will have more confidence in Indian engineering than on exorbitantly priced international products. In fact, customers feel better to buy an Indian product as it would be easier to get after-sales services and cheaper parts. They have realised that with deliveries of foreign spare products can sometimes take months leading to longer period of breakdown of their machines,” asserts Samir.
