Donning the Manufacturing Gear

India as

a hardware manufacturing hub-that is being pushed as the next opportunity for

India. But where Taiwan and China have ruled the roost for decades, can India

make a killing?

India is not new to

hardware and electronics manufacturing. Continental Devices has been making

semiconductor devices since 1964. TVS Electronics has been making IT peripherals

since 1986.



D-Link has three plants in Goa to manufacture its communication network
products. HCL Infosystems has been manufacturing PCs for a long time now.

Finnish company, Elcoteq, which specializes in mobile phones and communications

network equipment, has a facility in Bangalore. 

China's hardware

sector, counted among the strongest in the world, took 20 years to shape up.

High-tech companies which had their headquarters elsewhere in Asia chose to move

to China because labor was cheap, and investment conditions extremely conducive.

The Chinese worked rapidly on their infrastructure and showcased themselves as

the right place to invest in.

India is now attracting

some interest, and investment. The one deal that is on everyone's mind is the

MoU signed between the Andhra Pradesh government and SemIndia to set up a $3 bn

Fab city on the outskirts of Hyderabad. European company Tagsys and TCS will

work together to set up a manufacturing unit in Chennai, that will make RFID

chips and tags. According to PTI, Communications and IT Minister Dayanidhi Maran

has stated that Siemens is interested in setting up a plant to manufacture

telecom networking equipment. He also said that Alcatel, AMD, Ericsson, Cisco,

Flextronics, Microsoft, Motorola, Nokia, LG and Samsung have expressed interest

in setting up manufacturing facilities. How many of these will come

through-that is the question that is on top of everyone's mind? And how

quickly?

So what holds up the

progress? Wading through procedures, finding ways around the bureaucracy,

corruption, and labor regulations can be quite mind-boggling. Add to that our

maze of states and the work involved in understanding their procedures and

taxation systems. All these bring up costs that are not immediately visible.

When more lucrative destinations are available, why look at India?

Infrastructure remains a huge issue. Power availability and cost, and water

facilities are areas of prime concern. Transport networks and weak port systems

also are deterrents. To put it simply-we have not done enough to attract

investment.

All this and more would

be overcome if there was a huge market that could be served from India-either

domestic or international-in a cost effective manner. Show companies a market

and they will overcome all hurdles to grab it. The domestic market size has not

been exciting enough.

India, no doubt is a

growing market with plenty of potential. But for manufacturing to really make it

big, the strategy has to be export-led. India became an IT services major with

its exports, not because of its domestic market. So did China and Taiwan, with

hardware manufacturing. A MAIT study says that by 2010, Indian hardware exports

can cross $25 bn and contract manufacturing can be an opportunity worth $11 bn,

which will account for an Indian share of 2.2% of the global electronics

contract manufacturing market of $500 bn.

The opportunity is there. Are we? Not yet. Sadly, that has

remained the answer for quite some time now.