Across the survey, about 34% of companies depend on one or a few customers and about 45% do not own their design, working either build-to-print or on a co-develop basis. Of the firms dependent on a few customers, nearly two-thirds also lack design ownership.
The concentration is disproportionately a small-firm problem. Small companies are nearly three times as likely to be concentrated with a few customers – 53% against 19% for large firms – and more than twice as likely to lack design ownership, at 65% against 29%.
The report sets out why the combination is more dangerous than either exposure alone. When a concentrated customer leaves, the design leaves with it. The supplier is left holding a line it cannot re-point and a customer it cannot easily replace. Build-to-print suppliers, who do not own the drawing, are also entirely dependent on the OEM's team when a raw material needs substituting – so a supply shock that a design-owning supplier can engineer around becomes, for them, a stoppage.
The exposure runs through the report's other findings. Two-thirds of small companies have not qualified a second source for most critical inputs, against about one-third of large companies. Only about 44% of small companies formally review manpower shortages, with the process largely ad hoc elsewhere. And 42% of small-company leaders reported spending most or all of their time firefighting, against 29% at large companies.
Small firms also register the disruptions differently. Raw material and energy cost spikes were named by 59% of small companies, against 87% of large and 88% of medium firms. But over-dependence on one or two customers was cited by 35% of small companies against 20% of large firms and none among medium ones – and COVID was still named as a live impact by 24% of small companies, and by none of the large or medium respondents. The smaller the company, the longer a shock stays on the balance sheet.
The report is careful not to prescribe the large-company playbook downwards. A large diversified player can fund a skill development centre or a department that builds its own machines; asking a ₹100-crore specialist to do the same is not realistic. What it sets out instead is a smaller-scale sequence: diversify across at least two of five dimensions – segment, drivetrain, product, geography and customer – rather than the three recommended for large firms; improve OTIF and quality scores to deepen existing relationships and win approved-supplier status; expand the product range within existing core capability to fulfil more orders from the same customer; and move from pure build-to-print towards participating in the customer's design discussions early enough to offer input and hold a direct technical interface.
On automation, the advice is to start with the single most labour-intensive or hardest-to-staff job, prove it on one line and then expand, using a proven external partner for the first project before building the capability in-house.
Some of this cannot be done alone, and the report says so. It points to ACMA's existing supplier development programmes as infrastructure smaller firms can leverage rather than build, to cluster-level co-invested training facilities capable of training 2,000–3,000 people each, and to government schemes including PMKVY and JSS as routes into labour markets that individual small firms cannot reach. Three of four companies surveyed said skilling, training and manpower support would help them build resilience; one in three asked for support on design, engineering and R&D; and one in three pointed to financing and policy support such as PLI and MSME schemes.
The report also cites a Tier-2 player that funded its R&D partly through government innovation schemes – DSIR and DST concessional loans, repayable only after commercialisation – lifting R&D spend towards 2.5% of turnover and converting it into patents. Owning the patent meant it was no longer dependent on a single customer, and could attract new ones with a novel design. On the evidence of the survey, that is the exit from both exposures at once.