Several industry executives familiar with the matter told ET that manufacturers such as Dixon Technologies and Optiemus Electronics are in the fray for orders amidst the US retail major’s drive to shift sourcing, especially on the electronics side, to India.
“They have been scouting a lot in India to figure out what the capabilities of the manufacturers are,” one of the executives, who did not wish to be named, told ET.
Walmart, which owns majority stakes in Flipkart and PhonePe, is looking to source a wide range of products such as cables, chargers, screen protectors, home appliances, hearables, wearables, tablets, laptops, and lighting.
Employees of Walmart have met multiple contract manufacturers, inquiring about their capacities, processes, and testing methods, the executive said.
Responding to an email, a Walmart spokesperson confirmed the development stating that Walmart has been “quite public about our plans to source from India”.
ET’s emails to Indian contract manufacturers Dixon, Optiemus Electronics, Jaina Group and Bhagwati Products seeking comments did not elicit a response till press time.India is already one of Walmart’s top sourcing markets, with annual exports worth $3 billion, as of 2020. That year, Walmart had said that it plans to triple its export of goods from India to $10 billion each year by 2027.
“It will be a good starting point for Indian manufacturers to make inroads in the US, and the export potential is huge,” the first executive said, adding that Walmart is looking to reduce its reliance on Chinese suppliers amidst heightened geopolitical tensions between the US and China.
In the short term, Walmart will look to source products already being assembled in India. “Slowly as procurement picks up, the component makers are also expected to start making in India,” the executive said.
A second executive said that the sourcing will begin in phases.
“Walmart approaches manufacturers which already make the products it intends to source. For instance, if a manufacturer has an in-house design of a laptop it makes for other brands, Walmart will come in to inspect if it meets their stringent quality standards,” the executive said.
But meeting the quality standards will be the biggest challenge for Indian manufacturers, the executive said.
“They will give you an indication of the categories they are looking at. They will give you their specifications, and then you need to match the product as per their requirements, and it has to go through a lot of certifications,” the executive said.
The sourced products will have to go through reliability testing, apart from passing compliance regarding recycling, environment-friendliness, and some others which are not there in India currently.
“The Chinese suppliers understand it very well, but the Indian ecosystem will take time to implement them. I see them (the compliances) as a bigger bottleneck than the finances,” the second executive said.
The executive added that his company has also been in talks with a few of Walmart’s suppliers for sourcing products.
“If India-made goods are being sourced by Walmart, there is a good chance that the other brands supplying to Walmart would be open to sourcing from India as well, because they would have already validated the Walmart quality standards, processes, systems, and certifications. A few of those brands have already reached out to us, for a couple of broad categories, which shows me that Walmart is serious,” the executive said.
To accelerate India exports, the company had said in 2020 that it will “strengthen development of the supply chain ecosystem in India, both by boosting existing exporters and by expanding the nation’s pool of export-ready businesses”.
“By significantly accelerating our annual India exports in the coming years, we are supporting the Make in India initiative and helping more local businesses reach international customers, while creating jobs and prosperity at home in India,” Doug McMillon, president, and chief executive officer of Walmart had said then.
