‘We Are Urging Manufacturers To Set Up Operations Here'

Forbes India|August 14, 2020

‘We Are Urging Manufacturers To Set Up Operations Here'
Sajjan Jindal, chairman of JSW Group, on avoiding dependence on Chinese imports, the likelihood of the economy picking up from October and opportunities during the coronavirus crisis

Q What does the JSW Group import from China and what is the quantum of those imports?

Our imports from China are classified into two broad segments: Direct and indirect. The former is valued at about $400 million annually and comprises raw materials or consumables required in our manufacturing process. The second can be attributed to our purchase of equipment and machinery. While we purchase equipment from German, Italian, South Korean or Japanese manufacturers, they have workshops or an assembling facility in China. We are looking to avoid these indirect procurements from China and urging these manufacturers to set up operations in India or elsewhere.

Q How long would it take to start a vendor base in India and has the company taken any concrete steps in this regard?

We have identified potential suppliers for these critical raw materials within India as well as in other countries. We will work closely and support them in achieving the right quality at the right price. As these companies scale up in time, the price differential over China would become negligible. This transition will not happen overnight and we have set ourselves a target of 24 months for it to happen. There is a possibility of a slight discomfort in the next few months as we groom new vendors for our raw material requirements. This will have a small impact on the overall cost of production in the short term, but I see it regularising over a period of time. In the long term, I see us being much better placed than we currently are, as most of our vendors will be producing a high quality product within India; it will also shorten our lead time, given the location of production. I believe that as we set an example by building a supply network in India, other industries will see the benefit in doing the same. For example, Indian auto manufacturers import a number of their parts, but Indian ancillary units in that sector are exporting to a number of manufacturers globally, which means the product and vendor base are available locally, but not being utilised. These supply chain modifications would have to be made consciously to make India a more self-reliant nation and we hope to lead the way. As more industries commit to use a locally sourced and developed supply chain, I see a $100 billion opportunity for the Indian industry.

Q What is your opinion on the stimulus package announced by the government?


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August 14, 2020