Last year, there were questions about whether India would emerge as a center for hardware manufacturing (June 2004, p. 1-4). Now those uncertainties are being quelled, at least on the telecom side.
   To take advantage of India’s booming telecom market, manufacturing for cell phones and infrastructure equipment is underway in India, with more to come. The minister for communications and IT expects that India will attract some $800 million in investment from telecom equipment manufacturers during the current fiscal year, according to Indian news sources.
  Investment will come from OEMs and at least one EMS provider, Elcoteq. The company recently completed construction of plant in Bangalore. This new plant will employ about 1,000 people when fully operational with the widely reported capacity to produce 10 million handsets a year. Products manufactured in Bangalore also include communications network equipment. Elcoteq is claiming the position as the first global EMS company to manufacture telecom equipment in India.
   On the OEM side, Nokia this month announced that it will set up a manufacturing facility for mobile phones in Chennai. The company estimates that it will invest $100 to $150 million in the India plant, which will eventually employ about 2,000 people when at full-scale production. Another handset maker, South Korea’s LG Electronics, has already started handset manufacturing in a new operation near Pune. Unconfirmed reports are circulating that some other handset makers are interested in or exploring the possibility of manufacturing in India.
    Infrastructure equipment suppliers are also on the scene. Ericsson is manufacturing radio base systems at its factory in Jaipur. What’s more, Huawei Technologies, which has a software development center in Bangalore, reportedly plans to set up a manufacturing operation in India. Citing an executive at Huawei’s Indian unit, Reuters reported that the company intends to invest about $100 million in the operation.
    A tier-one EMS provider, Jabil Circuit, has also cast its vote in favor of manufacturing in India. Jabil is building its second plant in India, a 175,000-ft² facility near Pune (Jan., p. 7). Scheduled to be fully operational by midyear, the site is expected to serve not only the telecom industry, but also the consumer, instrumentation, networking and peripherals segments. The provider sees a growing need for full turnkey solutions to serve the Indian market.
    The powerful stimulus of India’s telecom market is attracting a surge of investment in manufacturing. According to Elcoteq, cell-phone penetration is a mere 3%, and services are growing at more than 100% a year. For a number of telecom players, this stimulus is enough to overcome the drawbacks of manufacturing in India. As these larger plants go into operation, demand will increase for local sources of component supply. Once a component supply base is developed, a major hindrance to manufacturing in India will be gone. When that occurs, India will have arrived as a manufacturing center.