India will need more firepower to counter Dragon country’s dominance on electronics


New Delhi / Bengaluru: It will take years for India to build a viable hardware manufacturing ecosystem that will match China’s, top country executives of HP and Lenovo told ET, arguing that despite the government’s efforts to woo manufacturers to set up shop there was still a gap in component suppliers and incentives for computer makers.

The government recently notified three key incentive schemes worth Rs 48,000 crore in a bid to position India as an electronics manufacturing and export destination.

These schemes are expected to help wean investment away from China as companies look to reduce dependence on the Middle Kingdom.

The tension in Ladakh, where India lost over 20 soldiers in a violent clash with Chinese troops, will only hasten the country’s efforts to make products at home.

“This is a long journey. It is not an overnight thing. It cannot happen because of a few announcements. It must be a serious long-term commitment,” Vinay Awasthi, Managing Director of HP India told ET.

Vietnam and Taiwan have emerged as alternative hubs for electronics manufacturing.

“I think some of them have raced ahead quite dramatically. India will have to continue in this direction and do a lot more to attract and make it the best alternative to China,” he said.

Sales of HP laptops and printers have increased in the country due to increased demand from corporations, IT firms and individuals following a nationwide lockdown to stem the spread of the Covid-19 virus. It is, in fact, setting up a second manufacturing unit in Chennai with contract supplier Flex to meet the domestic need for personal computers.

Lenovo, too, is in talks with the government to take advantage of its Production Linked Incentive Scheme and start smartphone exports from here but says incentives for domestic manufacturing of PCs is missing.

“You know, we have been knocking on the government’s door… It’s not easy for them, I know. We can actually move Vietnam (plant) to export from India if there is a PLI for PCs… but there is no incentive,” Rahul Agarwal, MD for Lenovo India, said.

Agarwal did not disclose the investment amount or whether the company would move some manufacturing to India.

A Motorola plant in Chennai has been shut for a while, and “we can actually expand there,” he said. Lenovo bought Motorola Mobility in 2014.

When asked whether Flex would bring its component ecosystem along as is the usual practice with the company, HP’s Awasthi said, “Our hope, vision and dream is that the value chain for manufacturing in India will continue to expand but there is a lot of work that is required for that ecosystem to come up. So, we are quite hopeful that with the kind of statements that our?government?is making, there is more wood behind that arrow. And eventually others will also follow.”

Referring to the typically long term commitment required of governments to build an ecosystem, he said, “Imagine the kind of ecosystem (in India for) the auto industry, auto component manufacturing, they’ve taken years to build.”

The government started accepting investment applications under the PLI scheme earlier this month and is expecting a good response from both mobile phone makers as well as component manufacturers.

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