Wed, May 29, 2013 - Page 14 News List

Global tech firms fill gap in India

Bloomberg

Global technology companies such as Samsung Electronics Co, Apple Inc and Sony Corp are poised to see surging sales in India, as the country’s anemic tech manufacturing sector cannot fulfill booming demand for TVs and smartphones.

The world’s fastest-growing market for consumer electronics has few homegrown makers of flat-panel TVs and no producers of mobile phones or the semiconductors and displays used in the devices. Last year, the nation of 1.2 billion people spent US$14.2 billion importing screens and smartphones, accounting for 90 percent of demand, government data show.

India’s technology manufacturers have not kept pace with its software industry, which last year contributed 4.7 percent to the country’s US$1.8 trillion GDP. While the government is trying to support local output with subsidies, only foreign companies have the technology needed to benefit from the incentives, India’s Department of Electronics and Information Technology said.

“India got carried away with the success of software,” India’s Consumer Electronics and Appliances Manufacturers Association secretary-general Suresh Khanna said. “We never developed newer, smarter technologies and largely ignored hardware.”

Assuming India’s economy grows at a 6.5 percent annual rate, the foreigners may be fighting for share of a market totaling 27 million flat-screen TVs by 2017, up from about 7.2 million this year, Khanna said in an interview.

Just a quarter of the TVs sold in India are assembled locally, by companies including Samsung and LG Electronics Inc, and none of the core components are manufactured in the country, Khanna said.

No smartphones are made in India, he said.

“India’s situation reminds me of China 15 years ago,” Gartner Inc research director Roger Sheng said. “It hasn’t taken the necessary steps to develop the technology.”

Chinese companies such as Hisense Electric Co (海信) and Lenovo Group (聯想) have built strong brands that rival the foreigners. Consumers in China bought a combined 365 million smartphones and TVs this year, according to Gartner, about half as many as were made in the country.

Some of the extras were exported to India — bearing the brands of domestic companies such as Micromax Informatics Ltd and Videocon Industries Ltd, Khanna said.

India’s government is offering a 25 percent subsidy on capital costs to set up tech plants. Samsung, LG, Panasonic Corp and Toshiba Corp are planning to take the offer, and the government has also received proposals from Hitachi Ltd, SanDisk Corp and NEC Corp, said J. Satyanarayana, secretary of India’s Department of Electronics and Information Technology.

India plans to approve as much as 250 billion rupees (US$4.5 billion) in foreign investment for facilities to assemble electronics, Satyanarayana said in an interview.

The government has eight proposals worth 10 billion rupees that are close to approval and another 10 proposals for 20 billion rupees in the pipeline, he said.

However, none are from Indian companies.

Without a manufacturing sector in India, “we will lose control of our balance of payments,” Satyanarayana said. “And we’ll lose track of all the foreign equipment in our country, which can be a major security risk.”

The government plans to approve bids to open the country’s first wafer manufacturing factories this month, with production starting next year, Indian Information Technology Minister Kapil Sibal said last month.

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