In 2001 India’s Prime Minister Atal Bihari Vaypayee’s planning commission released Report of the Working Group on Information Technology for the Formulation of the Tenth Five Year Plan (2002-07). (PDF)
Indian Secretary Rajeeva Ratna Shah, Ministry of Information Technology, was chairman of the Tenth Plan Working Group on Information Technology in which he wrote in the forward, “If Indian manufacturing companies have to compete globally, we need to have a clear and comprehensive national policy for hardware manufacturing industry. The basic philosophy to induce manufacturing of electronics and IT products in India should be to provide world-class environment.” This followed Ninth Plan poor performance by India’s manufacturing sector.
India’s services related to consumer electronics, computer hardware, communications and broadcasting equipment, industrial and strategic electronics and components was again emphasized in the Tenth Plan. (See firms in India offering ESDM services)
Lack of new investment, both domestic as well as foreign direct investment (FDI), was just one of many problems causing manufacturing performance to fall short.
In 2002 Robert Blackwill, U.S. Ambassador to India presented to the Federation of Indian Chambers of Commerce and Industry in New Delhi some reasons for lack of [U.S] foreign investments in India. Particularly, Blackwell talked about uncertainty over India’s economic reforms, high taxes and tariffs, mentioning too much Indian government interference over business decisions saying, “within the US business community there is an erosion of confidence about whether the sanctity of contracts will be honored in India.”
“Foreign investors are not economic historians. They do not care a whit about how far a country’s economic policy has come. Instead, they make their investment decisions on the prospects of the present and likely future policy environment in a given country,” said Blackwill.
Intel CEO Craig Barrett also addressed attendees at the gathering adding, “you [India] still need to make improvements in basic infrastructure, everything from logistics, transportation, power, etc., to be competitive with some of the other Asian countries for manufacturing.”
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India’s lack of the number of local vendors and suppliers when compared to nations like China, Singapore, Taiwan also means Indian industry could easily find itself unable to react or respond to the uncertainty that often exists on many electronics manufacturing fronts; customer demand, suppler availability, ability to meet sudden up-ticks and drops in scheduling and demand both domestically and internationally. These manufacturing delays can have costly consequences unable to be reabsorbed to protect margins.
Indian intentions for electronics services design manufacturing (ESDM)
In July 2003 I flew from Silicon Valley to New Delhi to keynote the 7th annual gathering of the Indian chapter of the Surface Mount Technology Association. The SMTA-IC event attracted a range of senior executives across the global electronics supply chain including a large number of decision makers in Indian-domestic and foreign contract electronics design and manufacturing services providers operating in India and several Indian policy makers, including Secretary Rajeeva Ratna Shah who also addressed delegates.
SEE ALSO
India EMS manufacturing trends and resources
Vietnam and South East Asia manufacturing resources page
My keynote focused on contract electronics industry trends with emphasis on ranking competitiveness of electronics solutions offered by Indian firms scattered across India compared to services offered by foreign, competing firms with operations in India from nations like China, Mexico, Philippines, Malaysia, to name a few.
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More importantly I discussed challenges India faced then concerning untrustworthy Indian business practices (including experiences my firm witnessed first-hand), lack of electronics supply chain infrastructure and some constraints preventing India from attracting sizable FDI needed to help build infrastructure.
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