American home appliances maker Whirlpool is exploring ways to turn its Indian business into a global sourcing hub for both components and finished products to de-risk itself from potential supply-chain disruptions arising out of concentrated reliance on China.
Whirlpool India MD Vishal Bhola said the company has reached out to suppliers in China and Southeast Asia on ways to incentivise them in conjunction with Indian government’s policies to set up shop in the country.
This includes components like compressors, motors and printed circuit boards (PCBs), all of which are capital-intensive manufacturing investments.
“At one end, there are geopolitical tensions between the US and China and we are telling component makers how India can become a sourcing hub for Whirlpool globally,” said Bhola. “The geo-political situation between India and China and the benefits offered under the ‘Make in India’ programme (has put the focus on) creating a local sourcing base
Whirlpool India imports 28% of the components it needs, which Bhola said is going to be brought down. He said while the government is pushing for domestic sourcing, it is a tight-rope walk between disincentivising imports and ensuring enough local capacities.
The company also has plans for expanding exports of refrigerators and washing machines from India, a business that at the moment is extremely small. Whirlpool is transforming its three India factories to conform to world-class manufacturing norms.
With this, Whirlpool joins Apple in seeking ways to expand its local production as well as building a component eco-system in India to de-risk global operations amid trade skirmishes between the US and China.
India,as part of its Atmanirbhar Bharat initiative, has also come up with a production linked incentive scheme for air-conditioners (AC), mobilephones and laptops, and has sought to discourage imports of AC and television.
Bholasaid Whirlpool India is continuing with capacity expansion plans forthe next three years due to 15% volume growth in business it reportedin the first six months of the fiscal. Demand will continue the next couple of quarters too despite price increases, he said. The companyhas increased prices in mid-single digits.
Atpresent, over 90% of Whirlpool India revenue comes from refrigerators and washing machines and the company claims to be the third largest player in these two categories after LG and Samsung. Bhola said the company wants to build other categories such as ACs, dishwashers, microwave ovens and water purifiers.