India lags behind in Electronic manufacturing
A number of manufacturing sectors like auto components, steel and even engineering companies claim that they can compete well with China and Chinese companies.
By Chhavi Dang & Ritwik Donde, TNN |
MUMBAI: A number of manufacturing sectors like auto components, steel and even engineering companies claim that they can compete well with China and Chinese companies.
However, there is still one sector where India is unable to get its manufacturing act together. In hi-tech electronic manufacturing, India is lagging behind not only China, but even smaller countries like Malaysia and Singapore.
While Taiwanese electronic manufacturing services companies have greater interest in India, they are still daunted by the challenges in the country. Around 60 Taiwanese companies have set up operations but not all of them have started manufacturing in India.
In spite of the political disconnect with China, Taiwanese companies have cumulatively invested close to $200bn over the years in China.
Now, Taiwanese companies are looking at derisking their manufacturing operations from China and looking at other countries including India. Taiwanese companies are under pressure from their US and European customers to derisk their manufacturing operations.
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Hardware manufacturers like Apple, Dell, Motorola, Sony, Hewlett Packard and IBM use Taiwanese companies for manufacturing their components like motherboards, routers, switches, LCD panels, and notebook computers. Taiwan is also the biggest manufacturers of semiconductors. It has nine 300 mm of semiconductor fabrication units. China is the only rival to Taiwan’s semiconductor manufacturing capacity. Taiwan has been investing in developing manufacturing capacity in Asian countries like Vietnam, Malaysia, Thailand and Indonesia.
While the biggest semiconductor companies in Taiwan like Taiwan Semiconductor Manufacturing Company (TSMC) and United Semiconductor Manufacturing Company (USMC) have not yet started looking at India, some of the Taiwanese brands which are targeting Indian consumers are also looking at manufacturing here.
Even American companies like SanDisk, a manufacturer of flash memory which outsources to China and Taiwan, does not want to manufacture in India. SanDisk president & COO Sanjay Mehrotra says: “Manufacturing in India means an investment of billions of dollars for us.
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It is an investment risk which we are not ready to take at the moment.” The technology and infrastructure does not exist in India, he adds. SanDisk has manufacturing facilities in China and Taiwan for its flash cards and does wafer-level manufacturing in Japan. It sells its products in India by importing them from these countries.D-Link, one of the largest manufacturers of LAN equipment, has set up a small manufacturing operation in Goa. D-Link managing director K R Naik says: “If you look at China, Singapore and Dubai they have ready-made infrastructure for manufacturing operations. You have to walk into one of their zones, lease the premises and you are in business.”
In India, on the other hand, one has to buy the land, do the construction and then start operations, this takes a long time, he adds.
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