INDIA AS A MANUFACTURING LOCATION FOR EUROPEAN FIRMS: DETERMINANTS, OPPORTUNITIES AND CHALLENGES
INDIA AS A MANUFACTURING LOCATION FOR EUROPEAN FIRMS: DETERMINANTS, OPPORTUNITIES AND CHALLENGES

Summary/Abstract: Foreign direct investment decisions in labour-intensive manufacturing depend on much more than labour costs. They require a careful evaluation of location advantages, labour market conditions and human resource management practices. This paper examines whether the Vellore–Ambur–Ranipet leather cluster in Tamil Nadu, India, is a suitable manufacturing location for European leather goods producers, using the case of Wolf, an Austrian watchband manufacturer considering relocation from Hungary, as an illustrative example. Based on a qualitative review of the literature and guided by Dunning's eclectic paradigm, location theory and international human resource management theory, the paper analyses the region's industrial environment, labour market, recruitment practices, cultural influences on employee motivation, compensation systems and staff turnover. The findings suggest that the cluster offers important competitive advantages, including a specialised workforce, strong industrial concentration and improving infrastructure. However, these advantages can only be fully realised if supported by a human resource strategy adapted to India's cultural and organisational context. The paper concludes that location decisions should be evaluated alongside human resource considerations and highlights both practical implications for managers and directions for future research.

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