This startup bets the time is ripe for India to emulate China in manufacturing

Photo credit: TheLeadSA.

India isn’t known for its manufacturing sector. That worries some economists, who believe that the country relies too heavily on services – think restaurants, hospitals, and IT – and isn’t focused on making global products that will bring in money, increase the incomes of citizens, and help the country handle growth.

It’s not that the country doesn’t have the right factors. It’s got plenty of room and millions of unskilled and semi-skilled citizens who need jobs. The Indian government has even launched an initiative – “Make in India” – that promotes the creation and buying of goods made within the country. But if things are changing, they’re moving slowly – perhaps what the sector really needs is a disruptive kickstart.

I want the scenario to be that if something isn’t on our site, it’s not available in India.

Rahul Garg is packing one of those with Moglix. It’s a business-to-business ecommerce site that connects merchants to suppliers of industrial products. Right now, the problem is that existing manufacturers are fragmented – and not even other Indians have an easy time buying from them.

Moglix’s thesis is that those who are manufacturing products – like CCTV cables and electric hammers – only have the reach to sell to people in their network and are difficult to connect with.

They’re also hard to verify and choose from – “Depending on the category, a company can be buying tens of thousands of products, from 2,000 or so different suppliers,” Rahul says – and a hassle to deal with. “If you’re buying 100 line items, you’ll have to make 25 calls, which is three calls for every interaction… That’s higher than call center metrics.”

On Moglix, products come from verified sellers. “One day, I want the scenario to be that if something isn’t on our site, it’s not available in India,” Rahul says

For now, only those within India can order from the site. Moglix wants to expand into other countries – but only after it helps the companies that are selling on its site turn into go-tos for those in India. And it’s got help – aside from an early round of funding from Accel and Jungle Ventures, it’s also received a seal of approval from Ratan Tata, who is the chairman of Tata Groups. Tata Groups is one of the country’s biggest manufacturers and includes subsidiaries like Tata Steel, Tata Motors, and Tata Chemicals.

“It’s been interesting to see this crossover of behaviors from manufacturing into technology,” ex-Googler Rahul says with a smile.

Behavior changes

Manufacturers, goods distributors, and businesses have worked together for years. Rahul has tried to replicate as much of that behavior as possible in order to get them online, from trying to recreate the intimacy of working in industries with the same people for years to keeping transaction fees low enough to compete with what’s happening in reality.

“We met and spent time with over 100 manufacturing companies to figure out what they needed,” says Rahul. That helped the team narrow down the types of companies it wanted to work with – those that bring in annual turnover between US$15 million and US$1.5 billion.

It also helped fine-tune its two-fold pitch to suppliers.

Make in India?