India Prime Minister Narendra Modi last week asked Indians to buy local products, pushing for a vision of a self-reliant India; global companies have interpreted the speech as backing for making products locally .
In his address to the nation on 12 May, Modi made a call to Indians to be “vocal about local brands” and subsequently tweeted that “the way ahead lies in local. Local manufacturing, local markets, local supply chain. Local is not merely a need but a responsibility”.
However, global brands currently dominate the Indian market in most categories and there are few local alternatives. They account for over 90% of the Indian market in the smartphone and television categories and over 80% in refrigerators and washing machines.
They have a 50-65% share in toothpaste, skin creams, soaps, shampoos and laundry. In most discretionary segments, such as beer, aerated drinks, chocolates and coffee, global brands make up for almost 90% of the overall market.
Executives of global companies have therefore taken the Prime Minister’s speech as endorsement for making in India.
Unilever, Colgate, Procter & Gamble, Nestle, Mondelez, Sony, LG, Samsung and Xiaomi are among the multinational firms that produce or assemble 90-100% of their portfolio in India. While apparel companies, H&M, Zara, Tommy Hilfiger, Jack & Jones, Gap, Levi’s and Marks and Spencer are increasingly expanding their sourcing from India.
“The intent here is to curb imports and not regulate MNCs in consumer-facing companies. With most global FMCG companies manufacturing in India for over 50 years, there will be little impact on their brands,” Edelweiss Securities senior vice president Abneesh Roy told the Economic Times.
In addition, global companies are confident that their customers in India will stay loyal to them even after Prime Minister Narendra Modi’s call to support local businesses.
Brand consultant Santosh Desai said the PM’s intent was to ensure companies have a self-reliant supply chain that is largely local: “Consumer preferences are entrenched… Consumers are unlikely to be hung up on MNC ownership of a brand.”
Findings from the fourth wave of Kantar’s COVID-19 Barometer have found that consumers are now more in favour of products that have been produced locally. 65% of people favour buying goods and services from their own country. This increases for those who consider themselves sustainability active (79%) or engaged (72%).
China has become the country most championing ‘buy local’ with 87% expressing this view, followed by Italy (81%), South Korea (76%) and Spain (73%). Overall, 42% of consumers say they now pay more attention to the origin of products. In households with children this increases to 52%.
Sourced from The Economic Times