Technologies, India’s second-largest contract manufacturer for consumer electronics, is foraying into information & communications technology (ICT) hardware, including laptops, desktops, tablets and servers, and is set to open a factory in southern India for it, a top executive said.
The home-grown electronics manufacturing services (EMS) player, which already produces smart TVs, LED lighting, washing machines and mobile phones, has zeroed in on a factory down south as part of the expansion plan.
“We are keenly awaiting the guidelines of the recently announced PLI (production-linked incentive) scheme for ICT hardware, which will decide our investment and output plans,” Sunil Vachani, chairman of Dixon, told ET.
He said Dixon is in talks with leading global and domestic laptop, desktop and tablet brands to shift their production to India once the PLI scheme kicks off.
“Now that India has achieved scale and self-dependence for assembly of mobile phone handsets, the next target is ICT hardware,” Vachani said.
Dixon has 11 manufacturing units–five in Noida (Uttar Pradesh), four in Dehradun (Uttarakhand) and two in Tirupati (Andhra Pradesh). Its wholly owned subsidiary Padget Electronics has been cleared to receive rewards under handset PLI scheme and is investing Rs 75 crore for its latest Noida plant dedicated to phones.
In India, local manufacturing of ICT products is scarce, as 87% of laptops and 63% of tablets are imported — mostly from China – to meet domestic demand. The basic customs duty on these products is nil because there is an inherent cost arbitrage and benefit to importing these devices as against manufacturing in India.
India suffers a cost disability of 7.52–9.8% compared with Vietnam, and 17.32-19% with respect to China for the manufacture of these products locally. To address the gap, India is set to come up with another PLI scheme with a financial outlay of Rs 5,000 crore as benefits to companies that expand production of ICT hardware in India.
India’s apex body of electronics makers, the ICEA, estimates that India has a $100 billion (Rs 7,41,225 crore) opportunity to manufacture laptops and tablets in the country over the next five years, which can contribute 18% to global exports of these devices.
Laptop assembly require close to 20 components, the major ones being printed circuit board assembly (PCBA), hard drive, memory, keyboard, LCD assembly (including webcam), bluetooth PCBA, and battery.
ICEA believes that global EMS players like Foxconn, Flextronics, Jabil, Wistron, Dell, Lenovo and HP, and brands like Samsung, Apple, HP, Dell, ACER, Lenovo and ASUS are keen on expanding their presence in India beyond mobile phones.
“It (local production) will also create 5 lakh additional jobs and a cumulative inflow of foreign exchange to the tune of $75 billion, and investment of over $1 billion,” said Pankaj Mohindroo, chairman, ICEA.