Hard time for sector
Huawei has a small Indian unit to make fibre-optic equipment near Chennai. The company has been harbouring plans to set up a factory to manufacture more products on the Indian soil, keeping in mind New Delhi's concerns that imported telecom gear may contain spyware. Besides, local manufacturing would also help Huawei avoid anti-dumping taxes and meet some guidelines India intends to implement. But recent developments in the telecom sector have prompted Huawei to slow down on its local manufacturing.
According to Ardhenu Mahaparta, a Cuttack based entrepreneur who owns a small-sized machine tool part making unit Tirupathi Enterprise, “A spate of unfortunate scams and frauds has mired the erstwhile glorious Indian telecom sector in controversy. This is certainly not a good time for the sector.”
Elaborating on Mr Mahapatra’s sentiments, Sanjay Rao, proprietor of Classic Works, a scientific equipment part making unit in Bengaluru said, “Inflation and other internal pressures, coupled with corruption have rubbed off the sheen of the Indian manufacturing industry, and there is hardly any respite.”
The Flextronics unit will take up manufacturing equipment for Huawei at a facility in Chennai. Getting Flextronics to manufacture equipment locally will help Huawei meet new sourcing rules in India where the sector regulator forecasts demand for telecom equipment to grow to Rs 965.14 billion in 2015 and to Rs 1.70 trillion in 2020, from the Rs 547.65 billion in 2010.
Priyanka Roy Chowdhury |
Keeping in mind the present day situation, Huawei Technologies backed down from its intention of setting up a factory in India and has contracted a unit of Flextronics International Ltd to manufacture telecommunications equipment for local supplies. This information was shared by a top executive at the Indian operations of the Chinese telecom equipment giant. Due to the low demand stimulus for telecom gear in India, setting up a new local manufacturing unit does not quite make sense now.
