How To Import From India And Save 35% On Your Products?

Oct 11, 2023 Chapter 2. Supplier

In this post, I’m going to teach you how to get lower prices for your products by importing from India. Now, if you’ve been following my channel for any length of time, you know that I have many videos on how to import from China.

But China has gotten a lot more expensive over the years, and not only that, but during the Trump era, the president imposed heavy tariffs on many product categories ranging from 10 to 25 percent, which still exists today and probably are not going away anytime soon. These heavy tariffs have caused many companies to move their manufacturing operations to other countries to avoid the extra taxes, and one of the biggest beneficiaries of these tariffs has been India.

So today’s article is going to teach you how to go beyond sourcing from China, find great suppliers in India, and get the lowest prices possible.

 

Now, over the years, India’s economy has been booming, and they’ve been making huge strides in various industries from textiles, handicrafts, and jewelry to technology, pharmaceuticals, and automotive.

The range of products India offers is both extensive and exceptional in quality.

In addition, India’s proactive government policies have encouraged foreign trade by signing free trade agreements with many countries, including the United States, which means lower duties, and more importantly, no tariffs.

So right now, there’s never been a better time to import from India. Depending on what products you decide to source for your eCommerce business, you can import products from India that are the same or better than China in terms of quality and cheaper prices.

 

Comparing China versus India overall in terms of overall costs.

When it comes to manufacturing any product, the cost of labor usually factors heavily into the end price. This is why whenever someone asks me about buying from the USA, it’s usually a non-starter for most products.

For example, the cost of labor in China is 4 times lower than in the US, and India’s cost of labor is significantly lower than China.

If you take a look at this minimum wage graph among different countries in Asia, you’ll notice that the average minimum monthly wage is about $170 per month in India compared to about $360 per month in China.

In other words, the average cost of labor in China is over 2 times that of India. Keep in mind that this is just an average of the minimum wage.

In a recent study conducted by Procon Pacific, it is estimated that the overall labor cost is roughly 37 percent cheaper in India than in China when it comes to manufacturing.

 

This difference in labor costs and tariffs is one of the many reasons why China has been losing global export market share in the past several years.

Here’s a snapshot of China’s export market share loss for some key product categories like clothing, furniture, and bags. We’re talking about losses of 10% or more per year. Meanwhile, both India and Vietnam have been gaining market share in droves.

 

Given the cheaper cost of labor, why not source everything from India?

Well, the main downside is that, unlike China, India does not make every kind of product well. For example, China is still the leader in electronics, toys, and machinery, and India is not going to overtake China anytime soon.

 

 

What Is India Good For Exactly And What Should You Source From India?

So what is India good for exactly, and what should you buy from India? Here are the main product categories where India shines in terms of manufacturing.

  • The first type of product is anything made out of leather. India is the world’s second-largest exporter of leather goods, such as shoes, bags, and garments. They have a long history of leather production and a skilled labor force that is well-versed in leather processing.
  • India is also a major producer and exporter of textiles, such as cotton, silk, and wool. In fact, India’s textile industry is one of the largest in the world.
  • In addition, there’s a huge variety of products made out of steel, ceramics, and bamboo that are unique to India and can be imported and sold in the United States and other countries.

 

Here’s a map of India that my friend Megla Borad created, outlining the different regions of India and their manufacturing focus. Similar to China, every region of India specializes in different products, and you must find an India supplier in the right location.

For example,

  1. Mumbai specializes in steel kitchen products and textiles.
  2. Ludhiana specializes in wool products. Panipat supplies home furnishings.
  3. Bangalore specializes in apparel, hardware, silk, and coffee.
  4. And Khurja makes ceramics. Kolkata specializes in leather bags.

I’m not going to list all the regions of India, but you can consult this map for more information. The key thing to realize is that India doesn’t make everything, but what it does make, it does very well and at lower prices.

 

The Main Reasons Why I Personally Source From India

So overall, India is probably not going to replace sourcing from China completely anytime soon. But here are the main reasons why I personally source from India for my eCommerce store over at BumblebeeLinens.com:

  1. The production costs are lower for our handkerchiefs and linens. I’d say, on average, prices are lower by about 10 to 15 percent, especially after you factor in customs duties. And unlike China, the US has free trade agreements with India because there’s not a trade war going on.
  2. To diversify my product risk. Unfortunately, US-China relations haven’t been that great as of late, so I’m playing it safe and diversifying my factories all over the world. I remember during the pandemic, my wife and I were terrified when one of our main factories shut down in China, and we had no idea when they would reopen.
  3. India is awesome for textiles, which is what I mainly sell in my store. The prices and quality for fabrics and handiwork are as good or better than China at lower prices.
  4. The overall trend is that China’s exports are going down, and more and more brands are sourcing from India due to lower prices. In fact, many of the companies I work with in China have opened factories in other Asian countries to avoid the US tariffs, and experts are predicting that China’s market share will continue to fall in the coming years.

 

 

How Do You Find A Manufacturer In India?

Now that I’ve got you excited about sourcing from India, how do you find a manufacturer over there?

Unfortunately, there’s no Alibaba for India, and there’s no magical directory for Indian suppliers. This means that you often have to do your own legwork to find a factory.

The good news is that, unlike China, many India factories actually have websites that you can browse and find online.

In fact, the easiest way to find a supplier is by using Google Bard.

For example, let’s say you want to source leather bags from India. Leather bags are primarily made in Kolkata, India.

So you can simply use this prompt: “Provide me with a list of potential suppliers from Kolkata that have more than 100 workers in their factory and export to the United States.”

Note that you should use Google Bard for these prompts and not Chat GPT, as Google Bard has more up-to-date information.

Anyway, within seconds, Bard will give you a bunch of factories that you can reach out to. You can also find some Indian manufacturers on Alibaba, but it’s pretty rare.

Overall, the best way to find a factory in India is to use a sourcing agent. A sourcing agent is someone who resides in India and has close ties to the factories over there. They will help you contact vetted suppliers, negotiate on your behalf, and help you navigate the various certifications required to import from India. 

Once you have a list of factories, you must learn how to approach suppliers in India.

In many respects, importing from India is a lot like importing from China, and relationships are everything. You must treat your supplier like a partner and project confidence in your dealings.

Never admit that you are a newbie, be professional, and act larger than you are.

After all, you have to look at yourself from a supplier’s point of view. Would you rather work with a newbie who doesn’t know anything, or would you rather work with a client that knows what they want and is decisive and ready to buy?

 

Here’s a sample script for initial contact that you can use:

“Hi, my name is Steve, and I’m a buyer for Bumblebee Linens, a store in the US that sells handkerchiefs. We are interested in carrying many of the items that you have to offer. Specifically, I would like to get pricing and availability for the following items. Please send pricing in 500, 1000, and 5000 unit quantities. If you could send us your product catalogs, lead times for manufacturing, and minimum order quantities, we would greatly appreciate it. Thank you. – Steve”

 

 

After you send out this initial email, you should get a reply with pricing. And once you get the pricing, keep in mind that these aren’t the final prices that you’re going to be paying. You are expected to negotiate. This isn’t like the US, where prices are fixed. In India, anything goes.

Before you begin your negotiations, you should have a target price in mind. How do you get the target price? Well, basically, you must figure out approximately how much you can sell your product for online by looking on Amazon, eBay, or other websites.

And then, just as a ballpark, you can take this number and divide it by four. Of course, this is a very rough calculation for what your target price should be. But in general, you want to be able to make at least a 66 percent margin on what you sell after shipping and customs.

As you negotiate with your supplier, you should ask questions about what affects the pricing and the minimum order quantity.

For example, with our store, there’s always some wiggle room regarding the different fabrics that we can use for our handkerchiefs, the thickness of the fabric, how it’s treated, etc.

In general, the more that you buy, the cheaper your costs are going to be. I always like to get pricing upfront for different order quantities so I know what to expect as my orders grow.

 

But in general, your ability to negotiate will heavily depend on your perceived value as a customer. And this is why you must project confidence in your negotiations.

Anyway, if the pricing you are getting is in your ballpark, you should request a sample of the product to be sent to you. And then, if you like the sample, you can arrange for a bulk order and shipping to your home country.

 

Here are a couple of questions you should ask your factory before you start production:

  1. What is the MOQ or minimum order quantity?
  2. What is the production time?
  3. How will the product be shipped? For orders shipped by sea, you should hire your own freight forwarder.
  4. You should also ask what the HS code is for your product. The HS code or Harmonized System code is a standardized system of names and numbers to classify traded products. This code is used by customs authorities around the world to identify products for the purposes of levying duties and taxes. With this code, you’ll want to check to see if there are any custom duties from India for your products.

 

And once you’re ready to place your order, you’ll typically have to put down a deposit of 20 to 30 percent of your order to cover the cost of materials and then pay the remaining balance upon completion.

If this is your first time importing from India, rest assured that it is highly unlikely that you’ll get outright scammed, but quality control can be a problem.

 

You should always hire an inspection service like quacn to inspect the goods before they are shipped. Quacn will send an inspector to visit your India factory to make sure your goods are as you expect. For about $300, hiring an inspector is 100% worth it because once your goods are shipped from India, it’s way too expensive to return them to India if there are defects.

 

Now that you understand the basics of importing from India, make sure you watch this post here that will walk you through the entire process of how to import from overseas step by step.

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