Made in India

It was not long back that whoever talked of IT manufacturing in
India was scorned at. Software, and software services, testing, and recently
hardware design were the only flagships that everybody was proudly talking
about. Organizations such as MAIT, ELCINA, and TEMA were beginning to loose
charm and clout. As a result even the country was sort of giving up on
manufacturing.

Though even now, it is politically not very correct to claim
that India can manufacture and succeed too, but the ground situation seems to be
changing quite fast. There is an increasing list of big players announcing that
they will be manufacturing or assembling in India. The list is long —
Motorola, Lenovo, Nokia, HP, Alcatel, Ericsson, Samsung, LG, and now Dell. While
quite a few of them are telecom manufacturers, the list on the IT side is also
on the rise. But that does not really make a difference. It's all about ICT,
at the end of the day.

It is a fact China and its neighboring countries may be great in
manufacturing, but another fact that nobody can ignore today is that India is
one of the largest and one of the fastest growing markets in the world. Last
year Indian enterprises and people spent about $20 bn on IT and about $31 bn on
telecom products and services. That is a mega $51 bn domestic Indian market. And
if it makes sense to start manufacturing in India, I am sure there will be any
player who will say no.

While India was still a small and emerging market, supplying
from manufacturing plants in China and Taiwan was possible and okay. Today, the
situation is that demands from India are so large that manufacturing capacity
has to be significantly hiked, wherever manufacturing is taking place. There if
fresh investments have to be done in manufacturing, they might as well be done
in locations much closer to the final destination. That is why India is becoming
a "happening place". Plus, gone are the days when India was seen as
politically and economically unstable. Therefore, the risks of setting up plants
here are much lesser now.

To believe that the manufacturing wave has started and is
unstoppable, and therefore we can pat ourselves on the back, will be a little
naïve. The challenge actually is manifold now. First, we will have to ensure
that political stability is maintained, if not strengthened. Second, we will
need to continue all the economic reforms that have a bearing on economic
stability as well as IT spending in the country. Third, we have to ensure that
IT and telecom spending in the country continues this healthy growth.

Manufacturing in India will bring in a lot of benefits.
Employment is one big boon. Then proximity between manufacturers of IT and
telecom equipment and their end users, and proximity between design companies
and the manufacturing companies will strengthen usage, and make the industry
more mature. Finally, it should and will help in further bringing equipment
prices down.

Many of us might say that our telecom and IT minister Dayanidhi
Maran is actually forcing telecom and IT vendors to announce manufacturing in
India, and therefore the final outcome will not be much. That means many will
not move from announcement to manufacturing, and even if they do, it will be
just for namesake, a small time operation. I will not completely write-off such
whistle blowers. There will be a need to keep a very close watch on the progress
on these promises.