Print this article

Comment This

Email this article

Sriperumbudur, once a sleepy laid-back village, 40 km from Chennai, was in the news for all the wrong reasons-the spoiler being the assassination of former prime minister Rajiv Gandhi in 1991. And, as the tragedy became a history, life moved on to other things. More than a decade-and-half has passed, and during this period, India has shrugged off its old economic policies and pursued a more liberalized economic regime, the ramifications of which have been felt in various sectors.

Quite strangely, a piece of Rajiv Gandhi's vision of a modern India is happening out of Sriperumbudur, the very place he died. Today, Sriperumbudur sports a new look-it's on the threshold of becoming one of the biggest SEZs in telecom manufacturing in India.

A cursory look at the landscape reveals that global majors-from Nokia to Motorola to Flextronics-are putting up manufacturing bases in Sriperumbudur, which is an indication of India's emergence as an ideal destination for electronics manufacturing services (EMS).

The Ground Realities
India's emergence as a manufacturing hub has much to do with former union IT and communications minister Dayanidhi Maran, who sold India as an ideal place to invest on EMS. He persuaded market leaders like Nokia and Dell, which have set up large manufacturing units in Tamil Nadu. The companies that had set up manufacturing bases act as successful proof-points for sourcing further investments and expansion. Moreover, there is overall buoyancy in the Indian economy.

As per a recent report by Goldman Sachs, the Indian economy will grow at about 8% until 2020; with this growth rate, India would become the second biggest economy in the world by 2050, next only to China. Similarly, a recent report by Gartner says that electronic equipment production in India is bound to reach $32 bn by 2011, compared to $14 bn in 2006. This signifies a CAGR of 18%. Gartner also says that semiconductor consumption in India will more than double, from $2.8 bn in 2006 to $7.2 bn in 2011.

Ganesh Ramamoorthy, principal research analyst, Gartner, says: "The growing domestic demand for electronics equipment, along with other favorable factors like low labor costs, large talent pool, and various policy measures by the government like fiscal incentives for local hi-tech manufacturing, is making India an attractive electronics manufacturing investment destination."

According to industry sources, in the last 2.5 years, India has seen commitments of over $17 bn investments in the IT and telecom sector. In telecom manufacturing, there has been a commitment of more than $1.5 bn, and as per estimates by the Communication and IT Ministry, India can expect fresh commitments of about $2 bn in 2008. This is a serious affirmation to India's manufacturing prowess.

Experts say that the economic growth and the increasing consumer disposable incomes have led to a more buoyant telecom market. India has witnessed a phenomenal growth in mobile telephony. Similarly, more liberalized telecom and manufacturing policies are driving growth in other areas, which, in turn, are leading to more investments in manufacturing. It also signifies that India has recognized the fact that self-sufficiency in telecom equipment manufacturing is necessary to address the needs of the domestic and the global market. Local manufacturing in India would also help companies become cost-competitive, especially in a price-conscious market.

NK Goyal, president, Communication Manufacturers Association of India, and chairman emeritus, TEMA, says, "With India achieving the highest telecom growth in the world, and becoming the third largest telecom market, tremendous interest has been generated in a large number of players in the telecom manufacturing space. India now offers a big market with an industry-friendly environment. We are soon going to become a hub for manufacturing. DoT and DIT are working hard to announce various policies."

Players in the Fray
Let's look at some of the success stories that are keeping the EMS ball rolling. Probably, one of the big-ticket investments that sowed the seeds of EMS in India is Elcoteq. The company inaugurated its Bangalore facility in 2005 and is one of the four volume manufacturing plants in the Apac region. Elcoteq focuses on domains like wireless communications network equipment, communication terminal products, and after sales services. The company's plant in Bangalore is equipped with latest manufacturing technologies like surface mount technology (SMT) and testing.

The plant employs more than 1,000 people, and it gives easy access to the company for addressing other emerging markets. Carsten Barth, director, Corporate Strategy and Global Marketing, Elcoteq, says: "We value our operation in Bangalore. India is an important market for communication technologies. The available labor is skilled and well educated, so, with highly motivated staff, we can manufacture and deliver high quality products and services. We are confident of successfully developing our business in India, and are well positioned with upcoming technologies like WiMax."

Page(s)   1  2  3  4