Financial Daily from THE HINDU group of publications
Tuesday, Jun 14, 2005
Industry & Economy
Foreign Direct Investment
Maran upbeat on US cos investing in India
Chennai , June 13
THE Union Communications and Information Technology Minister, Mr Dayanidhi Maran, is upbeat about attracting US hardware and telecom equipment manufacturers to India. He says that a number of these companies are seriously looking at Chennai as an investment destination.
Mr Maran, who visited the Silicon Valley in the US from June 5 to 10, says that hardware manufacturers, including global giants like Intel, are seriously looking at India to set up manufacturing plants.
Spurring this interest is a recent policy initiative of the Centre, when it said there must be at least 20 per cent local value-addition for telecom equipment suppliers to bag contracts from Government-owned companies, he said.
Mr Maran had met executives of companies such as Intel, Flextronics, Cisco, UTStarcom, AMD and leading venture capitalists. During his meetings, he had impressed upon them the growth in the Indian telecom market and the need for telecom service providers to reduce costs to customers, which would be possible only if equipment was also locally manufactured.
All the companies had realised this and were expected to finalise their plans in the next few months, he added.
If all plans fructify, it is estimated that they could bring in investments of about $1.2 billion (over Rs 5,200 crore) and generate at least 10,000 direct jobs.
Most of the companies were looking at Chennai, Bangalore and Noida to set up plants and it was up to the State Governments concerned to act fast in this regard.
Mr Maran was keen that semi-conductor fabrication units come up in India, which would be a major growth driver for the Indian hardware industry. His idea was that India should facilitate the setting up of a "fab city," a concept that he plans to write to the States about. Whichever State gets it will be a clear winner, he said.
Mr Maran said that his Ministry had been in discussion with Intel for the past eight months on the possibility of the company setting up an Assembly Test Manufacturing facility in Chennai. Intel has short-listed India as one of the possible locations for this facility with China and Vietnam being the others in the race.
"We have been successful in convincing them (Intel) to choose India over China or Vietnam," Mr Maran said. During his meeting with Mr Craig Barrett, Intel's Chairman, the Minister handed over a letter from the Prime Minister, Dr Manmohan Singh, to Intel.
The Minister said that Mr Barrett had told him that Intel would decide in a month the location for its chip manufacturing plant in India. Chennai, Bangalore and Noida were in the race, Mr Maran said and added that Intel had expressed concerns over infrastructure, particularly water, if it were to choose Chennai as a destination.
The Minister had informed the company that steps, including setting up a desalination plant, were on to address this problem and the Centre too was prepared to assist in this.
He would be writing to the Tamil Nadu Chief Minister about Intel's plans. Intel is looking at investing about $400 million (Rs 1,744 crore).
Mr Maran also met Mr Hong Liang Lu, Chairman, CEO and President of UTStarcom, a telecom equipment company. It specialises in providing solutions for rural areas using Voice over Internet Protocol. A team from UTStarcom is expected later this month after which the Ministry would set up a joint working group to see whether the technology could be adopted here.
The Minister had also impressed upon the company the advantages of manufacturing in India. UTStarcom supplies ADSL modems and switches to BSNL.
Another major company that Mr Maran interacted with was Flextronics, which has made significant investment in offshore software development in India.
However, it was impressed on the company that it would be to its advantage if it established a hardware manufacturing facility in India. The company had scouted some locations and Mr Mike McNamara, COO, Flextronics, had stated that it was crucial for the company to position India on its expansion plans.
CISCO Systems's President and CEO, Mr John T. Chambers, had assured the Minister that the company would be prepared to help in creating a national broadband infrastructure. Mr Chambers was expected to visit India to finalise the company's initiatives.
Mr Maran met Dr Hector Ruiz, CEO and Chairman, AMD, another chip manufacturer, which was keen on investing in India, and Dr Ruiz had accepted the Minister's invitation to visit India.
The Minister also met officials of Applied Materials, a large semi-conductor fab equipment company, and IBM, together to set up a 90 nanometer/65 nm fab in India.
The Minister had detailed discussions with the India Electronics Manufacturing Corporation, Applied Materials, IBM and the India Semiconductor Association on setting up a 90 nm/65 nm semi-conductor fab in India.
He also met meeting leading venture capitalists and highlighted the potential India now offered, especially for hardware manufacturing.
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