The India Hardware Summit 2003 organized by CII in Bangalore was dominated to a large extent by three issues—the need to build a local market in India, the imperative for a better infrastructure and easier policies along with the ever -present Chinese threat. Unfortunately, however, the summit did not really manage to achieve what it wanted—to chart out a blue print for converting India into a base of hardware manufacturing.

"Everybody knows and agrees that India has the potential for hardware manufacture. We have the potential to make our present hardware market of less than $5 billion to around $62 billion in just about six years. The question, however, is how to get there?" asked the CII Chairman of the Karnataka State Council Vinay Deshpande, setting up the tone of the discussion. The talks that followed were filled with views and counter-views on the challenges and strengths that India offered as a hardware destination and several ideas on how to overcome the hurdles in the path to increasing on its strengths.

"One of the reasons for the huge shift of manufacturing to China is the presence of a huge local market. This has in turn given rise to a slew of local brands. Today, 40% of the GSM, 90% of the TV and 60% of the PC market is dominated by local brands in China. This has given rise to conducive infrastructure, which has facilitated the entry of MNCs. India has not proven its strength in that area yet and there are no strong local brands here. If China can create a Legend or a Bird, why not India?" asked Texas Instruments VP (APAC) Larry Tan.

"With a thriving market for cell phones, it is eminently possible to set up manufacturing here to create Indian phones. Now we have to create a market for electron micro systems and demand has to be created for chip manufacture," added Deshpande. "Big-time manufacturing here is a question of time. We are already competitive in high value, low volume manufacturing and assembly and when we reach the volume numbers that makes sense for manufacturing, we will see more set ups," said an optimistic Samtel Color CMD Satish K Kaura.

While almost everybody agreed on the need for a healthy local market for real manufacturing to come in, there was a slight discord on the role that the government has to play in bringing a better environment for manufacturing. "40% of PC costs are simply duty-centric and nearly 3% is added to product costs when there is a delay in customs. Infrastructure has to be improved on and policies have to be implemented to ensure lesser cost. The government needs to play a catalytic role in ensuring that these are rectified," said Wipro Infotech president Suresh Vaswani.

On the other side of the scale, TVS Electronics director Gopal Srinivasan said, "Most of the work in the development of the manufacturing industry has to be done by us industry players. The government can and has to be a focal point, but 98% of the work has to be done by people like us." While that being so, many agreed with the strong and emphatic statements of WeP Peripherals MD and CEO Ram Agarwal when he said, "We are not vocal enough as an industry. We have to become more vocal and protest against the blatant mistakes made by the government. We have to start working with the government to prevent such mistakes and move as an industry to capture the opportunity."

MAIT executive director Vinnie Mehta spoke of the referendum of demands put forth to the government by the industry recently and the need for getting them implemented. The demands comprise some of the issues plaguing the industry like the huge duty imposed on components and capital investments, making local manufacturing an impossible task in the face of the imminent WTO deadline of 2005.

China dominated the discourse of many of the speakers. Almost all of them had a bit to talk on the various advantages that China had developed for manufacturing—either through the government or by way of the industry itself—and how it could be duplicated within India. Some others though, encouraged India to look within and derive best practices from within, instead of trying to ape the culture of another country’s industry, which was built on a different foundation.

Echoing this thought, Srinivasan said, "We have to learn to compete on the design skills, which we are already strong in. We also have to overcome our phobia for China. We can do this by sourcing some materials from China and even building selectively in the country."

Conspicuous in its absence was the lack of any in-depth discussion of the 2005 duty-free regime. Though some of the speakers touched upon it, the summit as a whole did not offer any insights on the ways local manufacturing firms can handle the competition post 2005, and this left a yawning gap in the subject matter that was covered.

At the end of the day though, the summit might not have achieved all that it set out to, as no solutions were offered. That apart, enthusiasm for the prospects of the hardware industry in India does not seem to have dimmed much. As every speaker exuded confidence and hope on the future, the emotion was addictive and much of the audience picked it up.

Sathya Mithra Ashok in Bangalore