Hafele, a German interior solutions company, plans to increase its sourcing from India to 50% in the medium term, up from the current level of under 10%. This shift is part of a broader strategy to expand local operations, including the establishment of a manufacturing unit and a supplier park, according to Frank Schloeder, Managing Director for South Asia.
The company is targeting a 30% local sourcing rate by December 2024. The planned manufacturing unit will focus initially on serving the Indian market, with an eventual goal of exporting globally. Investments for these initiatives are expected to run into several hundred crores of rupees, with supplier contributions potentially bringing the total to over ₹1,000 crore within five to six years.
Hafele India, which currently generates ₹1,200 crore in revenue, anticipates tripling its business in the next six to seven years, despite challenges such as policy changes and quality control regulations in the furniture industry.
Schloeder highlighted the company’s strategy to encourage international suppliers to manufacture in India through the proposed supplier park. This initiative is designed to localize production and reduce costs for global distribution in subsequent phases.
On market conditions, Schloeder noted volatility in India but expressed confidence in the country’s long-term growth potential. Hafele views India as its third-largest market globally, following Germany and the United States.
The company cited recent government quality control orders for cabinet hinges, set to take effect in January 2025, as a significant hurdle. While supporting quality improvements, Hafele raised concerns about the readiness of local manufacturing infrastructure to meet the new standards within the short compliance timeline.