Centre urged to focus on IT hardware manufacturing

India has the potential to emerge as a major IT hardware manufacturing hub for global markets, and the Union Government needs to concentrate on this sector, said Mr K.S. Viswanathan, Chief Executive, Strategic Sales and Product Business, Wipro Infotech.

A recent study forecasts that in 2010 the demand for hardware will be $93 billion while the country's production levels will be $23 billion - a gap of about $70 billion. India has a personal computer penetration of 14 per 1,000 whereas the global average is over 30 per 1,000, he said at a seminar on IT hardware.

According to Mr Viswanthan, work on new initiatives like the "offset policy" of the Defence Ministry - that mandates 30 per cent offsets for major defence purchases — will counter the threat of imports. This could be framed taking into account global best practices in high technology areas. Israel has 100 per cent offset programme and Thailand has 33 per cent, he said at a panel discussion on `IT hardware - Unleashing India's manufacturing potential" organised by the Southern India Chamber of Commerce and Industry.

The hardware sector in India represents 1.7 per cent of the country's GDP (gross domestic product) compared to 23.6 per cent in Israel, 15.5 per cent in Taiwan, 15.1 per cent in South Korea and 9.6 per cent in China. The advantages in India are low-cost manpower, intellectual labour force, favourable Government policies and large domestic market.

However, the disadvantages are poor infrastructure, irregular electricity supply, insufficient amenities, lack of defined processes and logistic challenges, he said.

According to Ms Poornima Shenoy, President, India Semiconductor Association, the Government support is critical to seed the semiconductor industry, which is still in its nascent stage.

The cost of setting up a semiconductor device fabrication — the process used to create chips, the integrated circuits that are present in everyday electrical and electronic devices — facility could be nearly $3 billion, and this amount needs to be re-invested once in three years.