Taipei Association, IESA in pact for hardware manufacturing

Furthering Prime Minister Narendra Modi's call to foreign companies to "make in India", the India Electronics and Semiconductor Association (IESA) and Taipei Computer Association (TCA) has signed a memorandum of understanding to promote local manufacturing in the field of semiconductors and electronics. Among the first in a series of initiatives to promote local manufacturing by tying up with Taiwan, IESA will look to capitalising on the country's experience in the field of manufacturing and electronics.

TCA has set up a front office in Bangalore and its members have reviewed Karnataka, Gurgaon, Noida and Ahmedabad as potential sites to build a technology hub.

"They are looking at about 200-300 acre of land, for setting up a Taiwanese hardware park. On merit they will zero in on one or two of these places," said MN Vidyashankar, president, IESA. One of Taiwan's top builders, Century Developers, has shown interest in developing these sites.

Domestic production of electronics has been a focus area of the new Indian government, which recognises that India's electronics import bill is expected to exceed $400 billion, more than the country's oil imports. Minister for communications and information technology Ravi Shankar Prasad has said several times that the government is looking to reduce the country's dependence on electronics imports.

The department of electronics and information technology (DeitY) is also looking to partner with experienced players to set up manufacturing clusters. "We have received proposals worth about Rs 70,000 crore in the last 18 months or so. All of them are from abroad-from US, Japan, Korea, Taiwan," said DeitY joint secretary Ajay Kumar. The discussions to partner with Taiwan in order to boost Indian manufacturing have been going on for three or four years, and several delegations comprising DeitY and industry groupings such as Manufacturers Association for Information Technology, IESA, Indian Cellular Association (ICA) and Electronics Industries Association of India have visited Taiwan to formalise terms.

ICA signed a memorandum of understanding (MoU) with the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA) about six months ago, and is working to finalise the terms of a formal arrangement with the Institute for Information Industry (Taiwan), said ICA president Pankaj Mohindroo. His association will focus on manufacturing mobile phones and solid state lighting or LEDs, he added.

IESA further said it was in advanced stages of discussions to sign an MoU with Japan, which could be finalised within a fortnight.

Experts believe that such agreements may be a stepping stone for India, but it is still too early to say how these collaborations will turn out. While the bigger companies would have made inroads into manufacturing in India already, it is the small and medium-sized companies from countries such as Japan or Taiwan that would look to enter the Indian market through these collaborations.

"Traditionally, we have looked at manufacturing for the purpose of serving the Indian market. For the first time, we are now hearing the government talking about... come and manufacture for other markets," said Kumar Kandaswami, senior director at Deloitte.

India's expertise lies in making products that are complex and low volume, so it is still some way away from competing with countries such as China on scale, he added.

But for manufacturing exports to become a reality, India would have to offer the same kind of conditions that competitors such as South Africa, Mexico and Indonesia offer, he added.

With regard to electronics, the government is moving in the right direction, said Neel Ratan, executive director at PwC. "This can go a long way coupled with other initiatives for keeping our import bill on electronics lower...The government is aware and it has been trying, it has only been partially successful (so far)," he said.

The government, however, will have to sort out issues such as whether it is cheaper to manufacture or to import electronics goods, he added. Over a period of time, India should look at not just corporate competition but a high level of intellectual property based competition as well, Deloitte's Kandaswami said.

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