India’s designs for manufacturing opportunity
India has become well known as a growth area for design but a huge market potential in manufacturing is tipped to be the next growth area for the continent. Current market forecasts show promising results for this area in the semiconductor design industry, estimating it to triple in the next 5 years as foreign and domestic supplier’s hurry to establish themselves in the market or make positive plans for further developments within the country. Companies such as MosChip and eInfochips Inc are already making plans to incorporate this location within their development strategy. iSuppli forecasts the total size of the semiconductor design industry in India will amount to $624 million in 2005.The industry is expected to nearly triple by 210 when it will exceed $1.7 billion.”
So what is it that makes India such an attractive environment? iSuppli explains. “The key factors driving growth in the semiconductor design industry in India include rapidly growing local markets, a strong education infrastructure, low cost design talent, short product lead-times, reduced barriers to entry, rising government support and improved infrastructure.”
With the proposition of a substantial domestic market and rising consumer spending it stands as one of the not yet exploited market areas. The appeal stretches right across the divide of the electronics equipment and manufacturing chain, offering the promise of good value with considerably less costs. The success of the design service industry may well continue as a primary driver for growth to the electronics industry, but only if the location retains its appeal and does not become over shadowed by other global providers. Eastern markets such as China may still however pose a threat to the success of the Indian market if rising costs prevail. “Before India can become a favoured manufacturing location for EMS providers and ODM’s, it must improve its telecom and transportation infrastructures” Gartner comments in a current research report which is somewhat contrary to the view on infrastructure that iSuppli illustrates in its report. This in effect may render India a less attractive option and could cast a shadow over exceptional growth in the market.
In order to abate any threat of excessive spending companies could look to localise various areas of the chain to create a more cost effective production process. Gartner makes comments to this effect. “Semiconductor companies would gain considerable benefits if they could locate manufacturing in the same country as their design operations, but at present, there are no major chip fabrication plants in India.” So attractive potential for the Indian market is not without the odd inevitable over sight however any loss to industrial investment could certainly be recouped by the virtue of a high level of skilled, but favourably less costly workers, which India can offer in continuos supply. And if the country focuses on the necessary areas of improvement to its infrastructure and maintains a good standard of education the industry will have every opportunity to continue in growth.
India may well still be in the stages of making improvements to its infrastructure before meeting western standards. But with the potential so readily available it will only be a matter of time before India is ready to welcome the commerce of industrial growth, certainly in manufacturing and design areas inclusive.
