India, the Home of Outsourcing, Now want to make their own Chips
Quote:NEW DELHI — The government of India, home to many of the world’s leading software outsourcing companies, wants to replicate that success by creating a homegrown industry for computer hardware. But unlike software, which requires little infrastructure, building electronics is a far more demanding business. Chip makers need vast quantities of clean water and reliable electricity. Computer and tablet assemblers depend on economies of scale and easy access to cheap parts, which China has spent many years building up.
So the Indian government is trying a new, carrot-and-stick approach.
In October, it quietly began mandating that at least half of all laptops, computers, tablets and dot-matrix printers procured by government agencies come from domestic sources, according to Dr. Ajay Kumar, joint secretary of the Department of Electronics and Information Technology, which devised Guests cannot see links in the messages. Please register to forum by clicking here to see links..
At the same time, it is dangling as much as $2.75 billion in incentives in front of chip makers to entice them to build India’s first semiconductor manufacturing plant, an important step in building a domestic hardware industry.
But like so much of India’s economic policy, it’s doubtful that either initiative will have the impact the government is intending.
“Nobody disputes India’s need to build up manufacturing. Not doing so would be fiscally irresponsible,” said Gaurav Verma, who heads the New York office of the Guests cannot see links in the messages. Please register to forum by clicking here to see links.. But Mr. Verma said that India’s efforts to force international companies to manufacture in the country are futile. “The government needs to not mandate this, but create an ecosystem.
”The domestic purchasing mandate, known as the “preferential market access” policy, seeks to address a real problem: imports of electronics are growing so fast that by 2020, they are projected to eclipse oil as the developing country’s largest import expense.India’s import bill for semiconductors alone was $8.2 billion in 2012, according to Gartner, a research firm. And demand is growing at around 20 percent a year, according to the Department of Electronics and Information Technology.
For all electronics, India’s foreign currency bill is projected to grow from around $70 billion in 2012 to $300 billion by 2020, according to a government task force.
“The problem we are facing is that the demand is growing so much that it is reaching nonsustainable levels,” said Dr. Ajay Kumar, joint secretary of the agency.
Dot-matrix printers, outdated in most of the world, are one of the few electronic products that India manufactures. Around 400,000 dot-matrix printers were sold in India in the year ended March 31, an increase of 2 percent from the year before, according to theGuests cannot see links in the messages. Please register to forum by clicking here to see links., a computer industry trade group in India.
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The saddest aspect of life right now is that tech gathers knowledge faster than society gathers wisdom...