Cisco plans to start manufacturing some of its equipment in India, with a goal of hitting $1 billion in combined production in and exports from that country. The move also continues Cisco’s ongoing push to diversify its supply chain.

The vendor is in the processes of building the manufacturing facilities in India. This includes support for testing, development and logistics, and expanding its in-house repair operations.

Cisco did not provide specifics on what equipment it would produce in India, but it did note it would “provide flexible, cost-effective delivery of next-generation services and applications and support complex cloud computing environments.”

Cisco began operations in India in 1995, and the country ranks as Cisco’s second-largest research and development center outside of the U.S.

Cisco noted in the latest news that it wanted to support “India’s vision of becoming a global manufacturing hub.” India’s government has been pushing its “Make in India” program that is targeted at increasing in-country manufacturing.

"Today, we are announcing strategic investments in Indian manufacturing capabilities as the next step in delivering cutting-edge technologies to our customers in India and across the globe," Cisco CEO Chuck Robbins noted in a statement. "Fueled by a rapidly developing digital economy, India is a focal point of innovation and business for Cisco, and we remain deeply committed to our partnerships here.”

The news also highlights Cisco wanting to “further strengthen and diversify” its supply chain, something Robbins has been adamant about over the past several years.

Robbins led off the vendor’s most recent earnings call with an update on its supply chain challenges. He noted those challenges were “improving,” which allowed Cisco to raise its full-year sales outlook.

“While the environment we are operating in remains dynamic, Cisco is better positioned today than at any time since I became CEO almost 8 years ago,” Robbins said. “While we continue to closely monitor the global macroeconomic conditions, the overall demand environment remains steady.”

Cisco CFO Scott Herren had previously lamented the financial challenge in having to negotiate supply chain challenges that spiked last year due to COVID-19-related work stoppages in China. He noted Cisco was able to work through some of these by sourcing hard-to-find components through brokers.

“When you buy from the broker network you pay a premium for those, and you see that reflected in the gross margins,” Herren explained last year.

Cisco’s move into India is also similar to one Ericsson announced late last year. That move has the Sweden-based telecom vendor expanding its production capacity in India on the heels of it scoring significant deals to provide 5G equipment to that country’s telecom operators.

“As 5G gets introduced in India, we are ramping up production of our 5G telecom equipment in Pune in a phased manner to support the network deployments of Indian telecom service providers,” Nunzio Mirtillo, head of Ericsson’s operations in Southeast Asia, Oceania, and India, noted in a statement at that time. “The production in India is part of our global production footprint with a presence across continents. This footprint has enabled us to secure a global, flexible, and resilient supply chain to respond quickly to market and customer needs, whereby India also benefits.”

Cisco’s plans for India come a week after the vendor unveiled a customer financing option “designed to help customers mitigate financial challenges based on overall market uncertainty.”

The astutely named “Cisco Capital Business Acceleration Program” runs through Cisco Capital and allows customers that take advantage of the program prior to July 29 to defer all payments until 2024. Those deferred payments would be based on the total amount financed and contract terms.

The program is open to all of Cisco’s products and services, including hardware, software as well as certain partner services and third-party hardware. Customers can also defer payments on Cisco’s Refresh and certified remanufactured products.

This move is similar to the India-supply chain move in that it also taps into a theme coming out of Cisco’s most recent earnings call.

Robbins, during that call, did strike a confident tone about continued product and service demand, but analysts repeatedly questioned the executive on forward-looking expectations tied to the vendor seemingly catching up on filling backlogged orders.

“Let’s start with the fact that our demand is stable,” Robbins said. “Based on the sequentials that we saw, demand remained stable. And in fact if you look out at our Q3 forecast, which we normally wouldn’t give you, the current forecast in Q3 is also in line with historical ranges of sequentials.”

Robbins also noted that while Cisco’s order backlog dropped 6% during that quarter, it “was up year-over-year, and we expect that we will end the fiscal year even with the guidance we gave you today with a backlog that’s roughly double what we would normally end the year with.”

Cisco is likely to provide more details on these topics during its next earnings call scheduled for May 17.