India's success story as an IT Software superpower is well known. But what about the hardware manufacturing? According to a study commissioned by Deloitte and the U.S. Council on Competitiveness, India may slowly emerge as the new preferred destination for global manufacturing. The study indicates that India stands second after China in manufacturing competitiveness and is likely to narrow the gap over the next few years. The study further said that it is the rich talent pool of well-educated, skilled people, adept in the English language, scientists, researchers and engineers and democratic regime that make the country a preferred and attractive destination for manufacturers.
According to the executives surveyed, research and development capabilities paired with engineering, software, and technology integration abilities are the key to manufacturing enterprises. India has all capabilities and global manufacturers can design, develop and manufacture innovative products in the country for sale in local as well as in global markets, said the study.
The classic factors of production labour, materials and energy are the most important drivers of global manufacturing competitiveness, said the senior manufacturing leaders who participated in the study. India has fast emerged as a manufacturing hub as Multinational companies have started to look for long term alternatives.
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| Vinay Rane VP Manufacturing Smartlink Network Systems Ltd. | Ajai Chowdhry Founder Member HCL Infosystem | Kunwer Sachdev Managing Director Su-Kam Power Systems |
"Hardware industry had been growing at a healthy pace till it hit a rough patch as a consequence of the global economic downturn. We must build on this initial success with next level of aggressive growth in other domains of technology including electronics hardware systems and design,"says Ajai Chowdhry, Founder Member of HCL Infosystem.
A great believer of the manufacturing potential of India, Ajai Chowdhry was invited to be part of the IT hardware Task Force set up by the Prime Minister of India, to give shape to the country's IT strategy. Ajai has tirelessly championed the cause of improving the PC penetration in the country. He has worked closely with the Government to take the cause of 'IT for the masses' agenda forward and is on several Government committees on IT and Hardware. Recently, he chaired the committee to draft the Eleventh Five Year plan for electronics Hardware in India.
"India needs to leverage its vast market size and identify market mechanisms and policy interventions for increasing its dominance in the key verticals of IT hardware systems, telecom, consumer electronics, defence and strategic electronics," adds Ajai.
Ajai Chowdhry has relentlessly advocated the cause of manufacturing in India to many non-Indian MNCs, Industry bodies and Government.
For any organization"MANUFACTURING" is an important & key activity in the Supply Chain business, whereby customer needs are considered paramount. Kunwer Sachdev, Managing Director, Su-Kam Power Systems, says,"We understand the need of the customer whereby he looks forward to getting timely supplies which needs to be cost effective and of reliable quality, meeting his ever changing needs. We focus on innovativeness to churn out products having high-end technology at affordable prices and constantly evolving features."
He also points out the three key concerns for those who are in the manufacturing sector, and produce products like Inverters, transformers, batteries, OLU's and Solar products etc. Firstly one cant ignore; Inclusive growth of all. For eg: Human resource to be treated as an asset, progression planning, training and holding-holding to become good leaders. Secondly, working on improving productivity, quality and reducing wastages in all spheres and areas. And thirdly, creating a vibrant & dynamic work environment.
Ankesh Kumar, Director, Channel Products and Marketing, Emerson Network Power India, says, "I feel domestic manufacturing capabilities are catching up with international standards. Locally made units are of high quality and as good as the ones manufactured for developed economies."
However, India's domestic manufacturing sector still has a long way to go if we want to produce high quality equipment for our needs. At this point, the industry mainly relies on imported components and raw material."In spite of increased import duties, global companies operating in India find it more cost-effective to import products than invest in manufacturing facilities," says Ankesh.
Smartlink Network Systems Ltd, is working proactively to increase the manufacturing activity. "We have three state of the art high speed SMT lines and wave soldering machines. Product Quality is assured through inspection equipment's such as X-ray machine, solder paste height measurement, electronic magnifier, incircuit testers, etc." says Vinay Rane, VP Manufacturing, Smartlink Network Systems Ltd. The company manufactures Networking products like Switches, Routers, Wireless Modem, VOIP products and various Motherboards."Our manufacturing lines are set up with full fledged shop floor control systems for efficient processes, linking inbound & outbound supply chains to the Operations," says Vinay.
According to the Manufacturers Association of IT (MAIT), a long term, holistic fiscal policy is needed to encourage hardware manufacturing in India. MAIT has the twin agenda of creating the demand for ICTE products in India through policy stimulus and building a globally competitive, standards compliant, ethically clean ICTe Ecosystem. MAIT is working with the government policy makers by bridging the industry-Govt interface and providing policy makers with thought documents.
The IT hardware industry has already proven to be the backbone of nation's growth as it is critical enabler in enhancing inclusion, reach, productivity & speed in all kinds of economic activities. It is particularly most relevant to all Government projects and programs like those of Education, e-Governance, Healthcare, Financial Inclusion, etc. as more and more use of technology is being adopted. Every nation considers IT as integral to their success which has made this industry worldwide as one of the fastest growing in the world. World Bank's reports state that 10% increase in computer and broadband penetration increases GDP by 1.38%. This is particularly relevant to emerging economies like India.
Recently MAIT has urged Ministry of Finance, Ministry of Commerce & Industry and Ministry of IT & Communications to address the critical challenges faced by Indian hardware industry due to the existing foreign exchange volatility.
Sabyasachi Patra Executive Director MAIT, says, "The Public Procurement Policy should definitely include the ERV clause. This will ensure that all government procurement secures interests of the government and the suppliers. Exchange rate is revised by Indian customs every month to collect duties at current rates. The same principle should be exercised for procurement too."
It is possible to meet the ever growing demand of Hardware post 2011. For that, we need to create a sustained demand and then work on inclusive growth, where the benefits of development reach every nook and corner of India. The purchasing power of the masses must increase to trigger this growth and resources needs to be tapped ethically and at affordable cost. New territories to tap raw material needs to be identified without effecting the environment and govt. policies need to be favourable & conducive for industrial growth.
Sachdev says, "We are putting our best foot forward to work in the field of Solar Energy to provide a clean and efficient energy alternative to the masses. Also we are coming out with cheaper, compact and affordable power back up systems which the common man in mind, who can afford them, to fulfill his ever growing energy need. This targeting of the masses will surely trigger demand and to meet this demand we are building capacities and putting up new facilities."
Consequent to the Government policy, progress has been made in the manufacturing of telecom equipment in the country. There is a significant telecom equipment-manufacturing base in the country and there has been steady growth of the manufacturing sector during the past few years.
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| Ankesh Kumar Director, Channel Products and Marketing Emerson Network Power India | Ketharaman G Unit Head-Application Engineering Group American Megatrends India Pvt. Ltd. | Sabyasachi Patra Executive Director MAIT |
In the last five years, India's contribution in mobile devices has increased from zero to 6 per cent of the global device production. Several Indian companies in the telecom and electronics industry are creating global scale.
India has all the potential for meeting the growing demand of hardware manufacturing. This is true in the realm of mobile telephony business and the growing demand for automotive electronics.
For Mobile telephony business and the growing demands of the automotive electronics. GPRS is cheaper now in India and we are trying to leverage our ability to provide solutions based on GPRS technology, says Ketharaman G, Unit Head-Application Engineering Group, American Megatrends India Pvt. Ltd.
Challenges
However India has lagged behind in meeting the growing demands post 2011, as far as Hardware manufacturing is concerned. For computers and other consumer electronics manufacturing where we already missed the bus to China and Taiwan," says Ketharaman.
Backward integration is the key to have a matured electronics industry in India. China and Taiwan are global manufacturing hubs and the sheer capacity and scale of production keep their costs low. Investment in local manufacturing that can fulfil domestic needs and also create opportunities for export of locally manufactured goods, leading to enormous economic benefits for Indian industry.
Finally…
The global rush towards lower costs component outsourcing provides with a window of opportunity like never before. With continued commitment to total quality management (TQM) and investment in R&D, India will be able to build on its inherent strength, take on global competition, and realize the ambition of building Indian MNCs.
India is rapidly expanding economy along with a booming consumer market and easy availability of skilled personnel has been instrumental in attracting several companies to invest in India. The rapid growth of the Indian economy is likely to make India the fifth largest consumer market in the world by 2025 from twelfth in 2005, according to a study by McKinsey Global Institute.
The aggregate Indian consumer spending is likewise estimated to quadruple to approximately US$1.5 trillion by 2025, on the strength of a ten-fold increase in the middle-class population and a three-fold jump in household income.
Besides the big companies investing in India, India continues to provide back office work to a large number of companies and industries. IBM, Intel, Boeing and Lockheed Martin are among several large corporates supporting joint research in high-tech areas.
