INDIA CAN BE A HARDWARE EXPORTER
Anwar Shirpurwala, Executive Director, Manufacturer’s Association of Information Technology (MAIT), evangelizes the potential of the country’s hardware sector
What’s your outlook for IT manufacturing in the country? India has already developed into a huge consumer market for IT hardware even though less than 10 percent of the population owns computers. Let’s say that in the next decade PC penetration goes up to 30 or 40 percent; this means the size of the market would also multiply three or four times. It’s in the interest of the country to address this market locally, and we need to learn from the software industry which has built a very strong base.
Thankfully, things are falling in place for us now, and the government is listening. We feel we are where the software services industry was in 1991. What should be the immediate course of action? We must do away with the inversive duty structure. We have a 10 million plus PC market, and a tablet market which is expected to eclipse the PC market in a few years. By simply doing away with the inversive duty structure we could convert a large base into local manufacturing. Based on studies by our research partners, KPMG, this would result in, by 2018, an additional revenue of ` 1,33,000 crore per annum from direct, indirect and induced streams. But India has always been regarded as a low choice for manufacturing. A reason for this was that the domestic market was small. Today we are among the few countries where the domestic IT industry is growing. If we are able to build this as a captive market then the potential for the country is huge. Once local manufacturers are assured of volumes, their economies of scale will improve, and India can potentially be a hardware exporter. What do you think is the role for Indian channel partners? At present a majority of the local channels are primarily into trading and providing services. Globally we have seen the trend that traders have become manufacturers and creators, and manufacturers have become traders. There’s no shortage of technical or management skill-sets among our local channel entrepreneurs; if presented with the right opportunities they can do it. For example, if it becomes more viable to manufacture PCs locally than import them, there would be opportunities for making components. Which hardware products can be manufactured here? Anything for which you can build a captive base for local manufacturers and which does not need high investment. An example could be the set-top boxes. We will also need to look at what technology will sell in future, and need to invest on a longterm basis.
In this we have to learn from some of the smaller Asian countries. The best example is Thailand, which is one of the biggest manufacturers of hard drives. The world realized its dependence on Thailand for disk drives when the floods hit and there was a shortage of drives.
What we don’t need is a handful of large manufacturers, but a large number of smaller manufacturers. Thailand did just that in the late nineties through government support for the disk drive supply industry so that every manufacturer sought Thailand for components to make disk drives. What is MAIT doing to get India on that track? We have been educating the government. We have been advocating the advantages of setting up hardware manufacturing hubs. We have been advising government policy-makers on the challenges faced by the industry, and how through proactive policies we can really unleash the IT potential of the country.
By doing away with the inversive duty structure we could convert a large base into local manufacturing. This would result in, by 2018, additional revenue of 1,33,000 crore per annum