India Hardware Summit 2003: Focus On India’s Strengths

Held on the 5th and 6th of November at Bangalore, the event dwelt at length
on how China is making a mark in manufacturing, leaving India behind.
"Everybody knows and agrees that India has the potential to manufacture
hardware. We can grow our hardware market to around $ 62 billion in six years,
from the current $5 billion," remarks Vinay Deshpande, CII Chairman of the
Karnataka State Council.

FOCUS ON LOCAL MARKETS

The event dealt with the challenges and strengths India offered as a
hardware destination.

"One reason for the manufacturing shift to China is the presence of a
huge local market there. This, in turn, has given rise to a slew of local
brands," explains Larry Tan, VP - APac, Texas Instruments. Today, 40% of
GSM phones, 90% of TVs and 60% of the PC market is dominated by local brands in
China.

Larry felt that India has not proved its strength in this area yet, largely
because there are no strong local brands in the country. "If China can
create a Legend or a Bird, why not India?" he questions.

TAKING INDIA PLACES: The power panel comprising (l-r) Texas Instrument’s Bobby Mitra and Larry Tan, Karnataka’s Tourism Minister DB Inamdar, Penang’s Minister Koh Tsu Koon and Karnataka’s CM, SM Krishna
SUMMIT HIGHLIGHTS
FOCUS AREAS
	How to develop the local market
	How to build better infrastructure
	Creation of policies friendly to manufacturing
LOCAL MARKET STIMULUS
	A huge local market gives rise to a slew of local brands
	Leads to an increase in conducive infrastructure, making it easier for MNCs to enter the market
	Rising volumes will leader higher number of manufacturing set-ups
ACTION POINTS
	Infrastructure required for hardware manufacturing must be improved
	Manufacturing-friendly policies should be created and implemented
	The government will only be a catalyst, but 98% of the work should be done by industry people
	A set of demands to be submitted to the government on duties imposed on components and capital investments
	India to compete on design skills which are its core competency

Vinay notes that given the great demand in the Indian cellphone market, it is
highly possible to manufacture these products in the country. "All we have
to do is create a market for electron micro-systems and a demand for chip
manufacture," he states.

Satish Kaura, CMD, Samtel Color feels that large-scale manufacturing in India
will take some time. "We are already competitive in high-value, low- volume
manufacturing and assembly. When we increase these volumes, manufacturing will
also expand and there will be more set ups," he says optimistically.

GOVERNMENT’S ROLE PLAY

While most panelists agreed on the need for a healthy local market for
manufacturing to flourish, there was a slight discord about the government’s
role in creating a conducive environment in this matter. "40% of PC costs
are duty-centric and nearly 3% is added to product costs, when there is a delay
in customs. The government needs to play a catalytic role in ensuring that these
are rectified," remarks Suresh Vaswani, President, Wipro Infotech. He
opines that infrastructure has to be improved and industry-friendly policies
have to be implemented to ensure lesser cost.

However, TVSE’s Director, Gopal Srinivasan, has a different view. He
states, "Most of the development work in the manufacturing industry has to
be done by industry players. The government can and has to be a nodal point, but
98% of the work has to be done by people like us."

Though there were intense deliberations on the government’s role in the
hardware business, many agreed with the strong and emphatic statements of Ram
Agarwal, MD and CEO, WeP Peripherals, "We have to become more vocal and
protest against the blatant mistakes made by the government. We must work with
the government to prevent such mistakes and move as an industry to capture the
existing opportunities."

Quite a few speakers set forth the need for extended co-operation between the
industry and government agencies. MAIT’s Executive Director, Vinnie Mehta,
spoke on a recent list of demands put forth to the government by the industry
and emphasized the need for getting it implemented. These included issues like
the huge duty imposed on components and capital investments, which made local
manufacturing an impossible task in the face of the imminent WTO deadline of
2005.

SHOULD INDIA GO THE CHINA WAY

China’s hardware industry dominated the discourse of many of speakers. The
country enjoys various advantages for manufacturing–either through the
government or the industry itself– and these could be replicated within India
as well.

However, some maintained that India should derive the best business practices
from within the country itself instead of aping China’s hardware culture.

Echoing this thought, Gopal felt that India should overcome its phobia for
Chinese inputs. "We can do this by sourcing some materials from China and
selective manufacturing in the country," opines he.

WHAT THE EVENT LACKED

Conspicuous by its absence was the lack of in-depth discussion on the WTO
2005 duty-free regime. The summit, as a whole, did not give any insights on the
ways local hardware manufacturing firms can handle competition post-2005.

Even as issues were thrown back and forth, no solutions came forth for
problems faced by the hardware business in contemporary times. One of the
visitors to the summit quips, "I know the issues facing this industry as
well as the success stories created by some in India. But I have not gained any
ideas on how I can succeed myself."

Depsite these drawbacks, optimism for the Indian hardware industry was not
dimmed. Bobby Mitra, MD, Texas Instruments India, rightly summed the summit when
he states "The winds are blowing our way and it is for us now to capitalize
on it."

SATHYA MITHRA