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India's IT hardware import dependence on China to grow by 50%

Written by: Staff
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New Delhi, Sep 17 (UNI) India's hardware demand will grow to 93 billion dollars by 2010 against its projected production level of 23 billion dollars leaving a deficit of 70 billion dollars in next four years.

Fifty per cent of this deficit will have to be imported from China because of price factor, competitive edge and the supportive policy of the Chinese government towards its hardware industry, an Assocham analysis says.

According to 'India's IT Hardware Future Prospects' study, India will face a deficit of computer hardware to the extent of 70 billion dollars by 2010, conceding major advantage to China which will meet half of the PC requirement of Indian domestic and industry users.

According to the chamber's estimates, the current demand of domestic hardware industry is a little over 24 billion dollars, almost one third of which is produced indigenously and remaining two third is imported mostly from countries like China, Korea, Singapore, Taiwan, European Union and the United States.

The analysis also says that China's remarkable progress in IT hardware manufacturing is mainly the result of the government's decision to consider chip manufacturing as a strategic industry.

However, in India, the neglect of IT hardware industry has led to the deficiencies in providing infrastructure support for hardware manufacturing, Assocham President Anil K Agarwal says.

As a result of this, the PC penetration in India remains to be abysmally lower in comparison with China. While in India, the PC penetration is less than 10 units per thousand in China it is more than 40 units per thousand which is indicative of the fact as to how the government of China is promoting its hardware industry, he added.

According to the estimates, PC sales can touch 25 million dollars by 2008 if a low cost computer is introduced for domestic users.

Currently, this potential still faces resistance to translating into local manufacturing.

Commenting on the prospects of India's developing as a manufacturing hub for hardware manufacturing industry, the analysis points out that as of now it is still miniscule, microscopic, assembly dependent and fragmented. It is still focussed on the domestic market which too is still small by international standards but with a vast potential to grow.

The study further points out that in the last eight years, the Government of India has been looking at the IT hardware sector and formulating policies and implementing them in a piecemeal fashion which needs to be reviewed in the interest of domestic hardware industry.

With companies like Samsung, LG, HP, IBM, Sony and Lenovo are establishing their R&D initiatives in India and are exploring manufacturing facilities, still some efforts to establish India as a major manufacturer of IT products are needed on a war footing.

Despite the fact that investor surveys point to a strong interest in India as a destination for FDI, their inflows, particularly in IT sector, in India have remained really low compared to China.

''Even the smaller countries like Vietnam are scoring high in setting up mnufacturing facilities as leading companies are planning to set up their base there,'' reveals the analysis.

The analysis suggests that a number of issues merit response and actions from the government to encourage domestic hardware industry which include creation of infrastructure. ''Overall logistics are required to take the domestic players up to international standards so as to increase exports in the sector,'' it added.

UNI SRS PKS BD1454

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