India a hotspot for cellular manufacturers
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India a hotspot for cellular manufacturers

By SiliconIndia   |   Tuesday, 25 November 2003, 08:00 Hrs
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BANGALORE: India is attracting cellular manufacturers after being touted as one of the fastest growing markets, along side China, amongst cellular subscribers. October witnessed an unprecedented 10 lakh new subscribers signing up. The total number of mobile subscribers in the nation stands close to 20 million as of now. Since the market is ringing in the volumes, GSM manufacturers are eyeing India as manufacturing base. Until now there are no GSM manufacturers in the country.

"Nokia had come earlier with a intention of setting up a manufacturing base in India, but somehow the market did not attract them and they went back. Now they are coming back. So is Alcatel, by signing a MoU with a PSU for manufacturing handsets in the country," said NK Goyal, President of Telecom Equipment Manufacturers Association (TEMA) of India.

With about 120 members, TEMA accounts for the entire Rs 20,000 crore telecom equipment manufacturing market in the country. According to Goyal, the market is poised to reach Rs 50,000 crore within the next couple of years. At present, there are about 64 million telephones and 25 million mobile subscribers. While the number of telephone lines is expected to touch 100 million by December 2006, mobile subscription is ringing in a growth of over 100 per cent every month.

One of the driving factors for this exponential growth is the tariff rates, considered to be one of the cheapest in the world. "It would come down further for both GSM and CDMA and the market would also witness a lot of consolidation amongst the service providers in the country," added Goyal.

One of the urgent issues according to TEMA, which calls for immediate attention from the government, is lowering of duty for importing of components. "After 2005 as per WTO agreement, duty on finished goods would become zero per cent, while on components will remain 15 per cent. This will hinder the growth of manufacturing in the country," said Goyal. The association is also recommending a formation of Telecom Finance Corporation with a corpus fund of about Rs 1,000 crore and raising up to Rs 25,000 crore.

"Most of the private telecom service providers raise funds through vendor financing. However there is no fund to assist the domestic manufacturers. The cellular companies have invested about Rs 20,000 crore in equipment, out of which Rs 15,000 worth of equipment, has been funded by vendors and the rest by domestic service providers. If the fund is made available, we have the technology and the infrastructure to manufacture the same in India," stated Goyal.

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