Risk Associated With Sourcing From India

The shift of production capacities from high-cost countries to India offers new business opportunities, but also new challenges. As shown by the example of the leather industry, sourcing from India is often associated with versatile risks. Risks are especially due to transcultural misunderstandings, lacking adherence to delivery dates, low quality standards, residues of harmful substances in products as well as problematic working conditions in Indian factories and high levels of environmental pollution. German companies which are planning to source finished or unfinished goods from India should consider sustainable risk mitigation strategies right from the start in order to avoid unpleasant surprises. Comprehensive coordination of the supply chain and the installation of effective control mechanisms may prove necessary to fully exploit the business opportunities provided by Indian suppliers. However, a thorough coordination of the supply chain will not only reduce individual business risks, but will also help to improve the local environment and working conditions in India.