India manufacturing taking root

By agencies   |   Friday, 02 September 2005, 19:30 IST
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MUMBAI: The jury remains out on whether India will ever develop into an attractive base in which to build electronics for export. But with the country's economy gathering steam, electronics makers have another reason to keep an eye on production there: a fast-growing domestic market with more than a billion potential customers. Contract manufacturing of electronics will nearly triple in India over five years, market researcher iSuppli Corp. predicts. Combined revenue for electronics manufacturing services (EMS) and original design manufacturing (ODM) will rise from $774 million in 2004 to $2 billion by 2009, iSuppli estimates. "We're not talking millions any more when we talk about the India contract manufacturing market," said Adam Pick, senior analyst for EMS and ODM services at iSuppli. "Very soon, these markets will be in the billions. That is very appealing to a business manager from any node of the electronics supply chain." Still, India is nowhere near displacing China as an electronics manufacturing powerhouse. For one, India starts from a tiny base. Even $2 billion in revenue would represent just 1 percent of the global contract manufacturing market, which iSuppli reckons reached $192 billion last year. More significantly, the growth is fueled by hot sales at home, not exports. Mobile phones are leading the way. Telecom is on track to surpass consumer electronics next year as the largest segment for contract manufacturers of electronics in India, iSuppli predicts. Besides cellular infrastructure and handsets, iSuppli tags broadband Internet equipment as a source of manufacturing growth. India's main drawbacks are its poor infrastructure and its shortage of local parts suppliers. "The component supply base is too small to support a significant contract manufacturing industry," iSuppli said in its report.

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