GREATER NOIDA, India — Melissa & Doug had a situation. For decades, the American toy brand had relied heavily on factories in China to make its products — wooden puzzles, stuffed animals, play mats. Suddenly, that seemed risky.
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It was February 2021 and the world was besieged by a pandemic. The lockdowns affected Chinese factories. Trade hostilities between Washington and Beijing were undermining the benefits of relying on plants in China.
Melissa & Doug was eager to move some production to other countries. Which explained the arrival of its supply chain director at a factory in Greater Noida, a fast-growing city southeast of New Delhi, the Indian capital.
The factory was owned by a family business called Sunlord. The Melissa & Doug executive was surprised to see that the plant could make high-quality wooden toys, at prices comparable to those in China. Late last year, Sunlord completed its first batch of products for Melissa & Doug, a modest order of about 10,000 items, and is now producing 25,000 a month.
“India has a lot of positive vibes right now,” said Amitabh Kharbanda, director of Sunlord.
India shows signs of emerging as a major place to manufacture products. Brands that have relied on Chinese factories for decades are expanding into India as they seek to limit the vulnerabilities of concentrating production in a single country.
The shift to India could make the global supply chain more resilient.
Although India has approximately one billion people of working age, the country has only 430 million jobs, reports the Center for Monitoring the Indian Economy, an independent research institution in Mumbai. And the majority of those counted as employees live a precarious existence as day laborers and agricultural laborers. The increase in exports could be a source of new jobs, especially for women, who have largely been excluded from the formal labor ranks.
In its nearly 80 years as an independent nation, the Country has typically been governed by a stultifying bureaucracy, an ardor for self-sufficiency and a disdain for international trade.
Prime Minister Narendra Modi has altered that perception, winning plaudits from business leaders for streamlining regulations. But manufacturing accounts for only 13 percent of India’s economy, a smaller share than a decade ago when Modi took office.
American brands “see the strength that India brings,” said Kailesh Shah, managing director of All Time Plastics, which operates a kitchenware factory north of Mumbai. But American companies are so dependent on Chinese industry that even a modest change could have big consequences. “Even eliminating 5 percent of those programs would flood factories in India,” Shah said. The hope is that an influx of brands will spread manufacturing wealth beyond the south, where auto plants and technology businesses have proliferated.
At the center of that vision is Uttar Pradesh, India’s most populous state, which has long been synonymous with rural poverty. Retailers in North America and Europe are exploring possible factory sites.
Shree Krishna, a family-owned factory in Moradabad, has been making home products for Walmart for 20 years. But it has recently seen an increase in interest from the retailer. The Jain family plans to multiply their business by 10 or even 20 in five years.
“Walmart doesn’t want to put all its eggs in China’s basket,” said Samish Jain, who oversees marketing for Shree Krishna. “They see India as the only country that can handle the scale of what they do in China.”
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