Flextronics, Solectron may follow Intel with manufacturing bases in India

Flextronics, Solectron may follow Intel with manufacturing bases in India

CHENNAI: Mobile handsets and telecom equipment manufacturers in the US, Flextronics and Solectron, are likely to follow Intel in establishing manufacturing bases in India shortly. An estimated $1 billion-plus worth of investments are expected to be pumped into India in the coming months by these three companies alone, following Union Minister for IT & Communications Dayanidhi Maran’s five-day trip to the US to get manufacturing companies into India.

In addition, UT Starcom, which supplies switches and modems to BSNL, has also shown interest in setting up a manufacturing unit in India and Cisco is focusing on extending its R&D operations to India, says Mr Maran, who returned to Chennai on Saturday night from the USA.

“A bulk of these investments is likely to be attracted by Chennai, which may well become the electronic manufacturing hub, especially after Nokia announced its decision to set up its plant near the city,” Mr Maran told ET.

On its part, the central government will assist these companies, by co-ordinating with the respective state governments, whichever place they choose to establish their base in India. “If we miss this opportunity, we cannot get them back to the country. Within India, one state’s loss could be another state’s gain,” he said.

Terming his visit to the US as “very successful”, Mr Maran said, “we went with a focused agenda to get manufacturing into India. While preparations for the trip started a month back, I led a lean team with decided targets.”

The team’s focus was Intel, which was to choose between India, China and Vietnam. Mr Maran had “quite a long” discussion with Mr Craig Barrett, chairman, Intel. “I think, I succeeded in convincing Intel, and a formal announcement will come in a month. It will be setting up an assembly test manufacturing (ATM) unit in India with substantial investments,” Mr Maran said.

Though Intel is looking at Chennai, Bangalore and Noida, it is likely to choose Chennai, following Nokia’s decision. “As far as Chennai is concerned, there are some issues regarding infrastructure, and water seems to be the basic issue. Intel requires undisturbed supply of water and I will be writing to the chief minister shortly,” he said.

Flextronics is said to be the world’s largest contract maker of handsets and an OEM supplier to all telecom and base station manufacturers like Ericsson, Nokia and Nortel. “They have big expansion plans in manufacturing and I made a strong pitch for Chennai,” he said.

Solectron, another major manufacturer like Flextronics, that supplies chips and related equipment to Nokia, Ericsson and Nortel, has shown similar interest in establishing a manufacturing base in either Chennai or Bangalore. Likewise, UT Starcom, too, has shown “serious interest” in setting up a unit in Chennai or Bangalore.

According to him, the keen interest shown by telecom equipment manufacturers is the result of a policy initiative taken by his ministry recently, wherein BSNL and MTNL reworded their tenders with an insistence that at least 20% of the value of a hardware order should have ‘value addition’ in India.

“Further, with the telecom sector booming in India, it is quite natural that these players would want to part of this growth,” he observed. The ministry will continue to interact with these companies, whose managements have promised to send top level teams to India shortly for further discussions.