Mobile boom draws telecom manufacturing to India

BANGALORE, INDIA – An anticipated boom in mobile telephony use in India is attracting multinational and local companies to establish manufacturing operations in the country.

Telefonaktiebolaget LM Ericsson in Stockholm is planning to make radio base stations in India.

“India is a vibrant market from the communications point of view,” Carl-Henric Svanberg, chief executive officer and president of Ericsson, told reporters in Delhi on Monday. “I see its mobile subscriber base touching 100 million by 2006 and 200 million by 2008.”

India had about 41 million mobile phone subscribers by August this year, according to the Telecom Regulatory Authority of India (TRAI) in Delhi.

The country’s mobile services market is forecast to grow by a compound annual rate of 28.3 percent during the next five years, to reach revenues of about $15.6 billion in 2008, according to research firm Gartner Inc. in Stamford, Connecticut.

To capitalize on the expected boom in India’s mobile telephony market, Elcoteq Network Corp, an Espoo, Finland based electronics manufacturing services company, is also setting up a manufacturing facility in Bangalore, India.

The company plans to make terminal equipment such as mobile phones, and communications network equipment like mobile base stations and routers for broadband equipment.

Some of Elcoteq’s global customers like Nokia Corp., which is also based in Espoo, and Ericsson are already key players in the Indian mobile communications equipment market.

“Our services in India would range from design, new product introduction, sourcing, supply chain management, manufacturing, test and after sales service,” said Henry Gilchrist, director for business development and marketing at Elcoteq Asia Ltd.

Besides India’s growing mobile telephony market, availability of skilled labor and a favorable cost structure also motivated Elcoteq to set up manufacturing in the nation, Gilchrist added.

Indian companies are also planning to manufacture mobile telephony equipment. The Indian government-owned Bharat Sanchar Nigam Ltd. (BSNL) in Delhi wants a multinational telecom equipment maker that will partner with it and set up a joint venture to manufacture mobile phones. BSNL offers mobile services in India using CDMA (Code Division Multiple Access) technology.

Although India has emerged as a software development and services outsourcing hub, the country still lags in the manufacturing of communications and information technology equipment. Indian government agencies and the Manufacturers Association of Information Technology in Delhi want to give electronics manufacturing a fillip, because of its employment potential.

Working with the government of the state of Karnataka, Elcoteq plans to be a catalyst for the development of hardware manufacturing in India, according to Gilchrist.

“Our initiative will automatically lead to an establishment of a supply chain cluster, either through local manufacturers or through global companies, to meet the demand for raw material, components and other technologies,” Gilchrist said.

The government of Karnataka shares Elcoteq’s viewpoint, according to Gilchrist. Both want the initiative to act as a test case for other multinational corporations to follow and set up telecommunications manufacturing in the country, he said.

Elcoteq expects the supply chain clusters to start taking shape within the next 12 to 18 months. Its own facility will be operational by early next year.