Telecommunications

July 13, 2006
India, desirable destination for handset manufacturers

H.S. Bhatia

• India is one of the fastest growing GSM markets in the world;
• India has the potential to boom into a colossal market for mobile phones;
• LG Electronics has established two manufacturing plants in India;
• This move reiterated LG's commitment to the Indian market;
• LGEIL is exporting GSM handsets to Sri-Lanka, Bangladesh and Nepal;
• The government support for handset manufacturing has been encouraging.

NEW DELHI -- India is going through a golden period in the mobile telephony sector, where growth and development have hit a rapid pace. It is one of the fastest growing GSM markets in the world, after China. There are over 90 million mobile subscribers in India and the numbers are set to grow in leaps and bounds in the coming years. An additional four million new users are expected to be adding to this number every month.

India now has the potential to boom into a colossal market for mobile phones. And there is still great scope for growth, as mobile ownership is just eight percent in India. While the population is more than a billion, networks are still largely city centric. This strong domestic demand coupled with its favorable location and the government's support to manufacturing industry have made India a desirable destination for handset manufactures to set up operations.

In the last nine years of its operation in India, keeping in mind it's commitment of delivering the best, LG Electronics has established two Greenfield manufacturing plants at Greater Noida and Ranjangaon (near Pune). As the mobile handset market in India grew exponentially, LGEIL announced the setting up of India's First Greenfield GSM handset manufacturing plant in Ranjangaon in 2004.

By opening the first GSM handset manufacturing plant in India, LG ensured that it had the first mover advantage over competition as manufacturing in India has distinct advantages including price and time to market. This move strongly reiterated LG's commitment to the Indian market.

“It is my strong contention that we must first be strong in the domestic markets, to be able to compete internationally.If we consider China as our benchmark for competition we can see that they have a developed domestic market, coupled with strong research and technological development, which adds to their credentials as a global exports hub. So besides meeting the strong domestic demand, Indian manufacturing must be developed to be able to match global standards. This requires intensive investment in R&D and stringent quality norms. The initiative for the same must come from the manufacturer's themselves,” said H.S. Bhatia , product group head, GSM, LG Electronics India.

In a short span of one-and-a-half-years, LGEIL has started exporting its GSM handsets to Sri-Lanka, Bangladesh and Nepal and would soon start exporting to Middle East and African countries as well. Currently, LG manufactures one million handsets in the Ranjangaon plant, and this figure is expected to grow exponentially in the coming years. India’s scale of production will soon make it a forerunner in handset manufacturing with economies matching those of China.

Toward the end, the government support for handset manufacturing has been forthcoming. However, a lot more needs to be done, especially in terms of infrastructure and port development. “I am positive that the steps taken by the government in the direction of providing favorable support to manufacturing will be doubly reciprocated by the industry,” added Bhatia.