Expert View

April 18, 2003
India should become a hardware power: Tyco

Convergence Plus Team

Tyco Electronics Corp. India is a force to reckon with in the communications, computer and consumer electronics segments. It considers the Indian market to be strategically important, and has made large-scale investments in India, besides opening various facilities. It has a manufacturing unit in Bangalore where Tyco has recently made huge investments for fiber optics and intends to produce smart card connectors. It will make more investments in this facility soon, and start producing fiber connectors and tooling.

Tyco's Indian operation is headed by Kuldeep Tikoo, country manager--communications, computer and electronics (CC&CE), Tyco Electronics Corporation India. He conceived TEI Technologies -- a joint venture between Tyco Electronics and Elentec, Korea -- at Noida, where he is also a director. Convergence plus caught up with Tikoo to know more about Tyco's plans for the Indian market and to gauge the company's present position in the electronics market scenario.

Convergence Plus: Tyco has shown phenomenal growth in the last few years. However, the industry is presently going through a recession. How do you plan to go ahead in such a scenario?

Kuldeep Tikoo: Last year was the worst recession for the industry. The situation is slowly improving. However, Tyco as a company was making profits and grew rapidly even during this phase. We are everywhere in the electronics segment. We are focusing on providing specialised and customised products, and have entered into partnerships with various OEMs. We can add value to those products and help them drive their businesses. We are tier one suppliers for a majority of OEMs. Our competence lies in understanding the local business and changing the market strategy. We will go on acquiring companies having great products, but lacking the revenue of making it on their own. We are always looking out for new opportunities.

CP: How important is the Indian market for Tyco?

KT: The Indian market is strategically very important for Tyco. We have made large-scale investments in India, including a tool design center that takes care of our worldwide projects. We have a tool room in Cochin and a product-engineering center in Bangalore. Tyco's manufacturing center in India exports products worldwide. Our applications team travels with the marketing people to know more about the market trends.

CP: What are the present areas of your business?

KT: Manufacturing is our major thrust. We want to be closer to our customers and add value. We are the preferred suppliers and the market leader, and have achieved 100 percent growth year-on-year. We are focusing on RF and microwave in the semiconductor segment. In passive electronics, we are focusing on connectors, cable, assemblies, relays, switches, batteries and battery packs, and fiber-optic products. We will go after anything related to our field and expertise, and acquire companies with specialised products.

CP: How much emphasis do you put on R&D?

KT: About 10 percent of our overall revenue is used for R&D. It keeps us ahead of competition and helps us provide better quality and cost effective products.

CP: What are you doing in the telecommunications arena?

KT: We are addressing wireline and wireless segments, and are the biggest suppliers to the telecom players in the country. In fact, 70 percent of the Indian telecom industry uses Tyco products. Though I personally feel that WiLL based CDMA is likely to boom, we do have very good products for GSM too.

CP: Can you elaborate on the plans and investments lined up for your Bangalore plant?

KT: We are a technology driven company. Tyco has made huge investments in Bangalore for fiber optics. Another Tyco facility in Bangalore will produce smart card connectors. The Bangalore manufacturing unit produces single- and multi-mode fiber patch cards and pigtail fiber for the Indian and global markets. It is presently the biggest manufacturing plant in India.

CP: What changes in policies and regulations can make India a major manufacturing base?

KT: Indian manufacturers are very competent. However, they need encouragement and support from the government. The changes that the Indian government should bring in are -- the component duty should be reduced to zero, certain incentives should be given to local manufacturers, and impose duty on imported, finished products. The software sector gets concessions, support and encouragement from the government. However, the hardware sector gets a step-motherly treatment. The hardware sector should also have certain sops and facilities to grow. India should become a hardware power. After all, without the hardware strength, India can never become a true IT superpower.