Indian politicians, regardless of their party affiliation, want overseas companies to set up shop, and manufacture hardware and chips in their country. Never mind the fact that the infrastructure to support a chip fab is no there, the ports cannot handle the rigors of International trade and roads at best can described as drive-able. Still, the dream lingers. In fact they make it more attractive for overseas companies to get a piece of the government spending if they set-up shop and make products in India. Perhaps that’s why you see many a few announcements from Huawei, ZTE, Nokia and Nortel, about their Indian manufacturing operations. Apparently, this is going to bring in $800 million in investments over next 12 months.
While these efforts are good, in reality they will not mean anything in larger scheme of things. Instead, India needs to develop its own set of start-ups and telecom vendors. C/Net’s Michael Kanellos, while in India recently, wrote extensively about it. One company that is generating a lot of buzz is Tejas, which has raised $29 million in venture funding, will have sales of $100 million within 18 months and has equipment installed in 20 Indian carriers. The company backed by Desh Deshpande of Sycamore Networks is developing Ethernet-over-Sonet boxes, and will try and expand globally as well. Given the popularity of wireless in India, one can see quite a few innovative start-ups get off the ground. Telsima is developing a broadband switch that works well with WiMAX. Alcatel is working with C-Dot, to develop wireless technologies, especially in the WiMAX arena and that again is an interesting development.
I think with more than 20 operators in the country, India can offer the early “market” for most of these products, and can help grow the business overseas, ala ZTE and Huawei. I think that is a more meaningful and a better strategy. Getting overseas companies to come in and assemble their products in India, well that’s short term. The minute government contracts dry up, these guys are going to pull up their tents and move elsewhere.