Accelerating the Indian Hardware Industry

By Grant Kuo, MD, Mediatek

Grant Kuo, MD, Mediatek

Headquartered in Taiwan, Mediatek is a pioneer in semiconductor industry and market leader in cutting-edge systems-on-chip (SoC) for mobile devices, wireless networking, HDTV, DVD and Blu-ray.

The technological change is accelerating at an unprecedented pace and it will change the world as we know it. In India as well, these technologies have caused the manufacturing industry to experience a wave of advancement i.e. to become a global leader of hardware and IT manufacturing who can shape the future of technology consumers. The technology evangelists often tout cellular phones and internet access as great levellers in terms of development and economic growth of the country. Today, India ranks second in the global smartphone market with the total base crossing 220 million users. And in the country, mobile handset is the number one of the top 10 electronic products, and almost takes about 40 percent of the top 10 total amount of revenue. Such developments have been possible due to the sincere efforts of the Indian Government along with factors such as India being a rise in demand, high potential market for smartphone producers, rise of technology and IT industries, penetration of internet and FDI.

On the global front, Asia is rising not only as an economic power but also as the next gen technology hub due to change in trade flows, labour norms and fluctuating economy strength of nations. When we look at the manufacturing aspect, on one hand, we can see that some countries are losing out on its labour market due to increased wage cost and unfriendly work conditions. On the other hand, high wage countries are attempting to leverage automation and disruptive technologies into newer upcoming markets that promise growth and ROI. These changes have given rise to opportunities for India to become the manufacturing hub. It has a large consumer base with a rapidly growing middle class and an available skilled labour for efficiently carrying out production activities.

In order to make India the manufacturing hub for electronics, the Indian Government has undertaken various initiatives to create a conducive businesses environment under the ‘Make in India’ campaign. As the market size for electronics is expected to grow to $400 billion by 2020, it is crucial to promote local manufacturing. Under the flagship of this campaign, the mobile sector is seeing an expansion with focus shifting to creating handsets locally to meet India demand. It began with assembling last year, with many companies importing the parts and putting together the end phone in India.

In this year, because of tightened tax rules on completed PCB and battery, there was another shift when leading companies started setting up their manufacturing base in the country. And now, we can see a few companies have started to take action by focusing on developing in-house hardware design capability. The growth will be exponential in the phase of ‘design’, because it will help build not only the mobile handset industry, but also component and design industry in India, which will further boost the whole ecosystem in the country. Hence, from a business point of view as well, the manufacturing landscape seems to be welcoming in terms of policies and regulations as well as profitable for the companies that want to invest or bring their expertise and solutions to India.

65 percent of the current demands for electronic products are met by imports. In relation to that, the industry is expecting to minimize its dependency to 15 percent in the near future by investing in the talent pool available within the country. Currently, the hardware industry requires highly specialised skill sets and the existing talent pool possesses insufficient exposure to practical training for the industry to develop rapidly and do justice to the investments made. There is lack of right knowledge of the design process which can result in wrong decisions when choosing components or assembling them together leading to failure in execution. What we require is a uniform set up in the country with the right technology and the right knowledge to support the growth of manufacturing scenario in India. If technology firms focus on bridging this gap by firstly making the talent pool in India more skilled in the design domain, and equip them with decision-making capability in design, we can expect component and hardware makers to find direct value in India market.

For the workforce, companies can invest in training programs for manager level positions who can then implement it further in their organization, via efficient planning, judging, and leading the design team. For instance, programs associated with skill development, such as MediaTek’s Handset Design Skill Development program in association with the Ministry of Electronics and Information Technology (MeitY), India Cellular Association (ICA) and Taiwan Economic Ministry, is set to provide hands-on training for hardware engineers through a rigorous course in mobile handset design, problem solving and the Internet of Things. Initiatives like these by technology and production companies will act as significant contributors to the entire industry’s development and enable the country to boost in-house productivity, there by resulting in decreasing imports.

Looking ahead, over the next few years, the technology sector in India is expected to be $1 Trillion opportunity in the next five-seven years. Out of the $1 trillion opportunity for India, the hardware manufacturing is estimated to grow into a $400 billion industry, software services a $250 billion space and telecom and IoT making up the other $250 billion. With digitisation and the increase in the number of smartphones going up, India will soon be a data rich country. The internet economy alone has the potential to create 65 million jobs and increase the per capita income by 29 percent as more users get connected online, according to a Deloitte study. Hence, the there is an aim for India’s mobile production to rise from just acting as a platform for assembling lines into full-fledged manufacturing services. This will not only enable the manufacturing industry but also bring career opportunities for the local labour.

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