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Our Bureau

Chennai, Sept 17

Mobile handset makers trying to source from local suppliers are facing a dead end. They feel the components manufacturing industry in India is not proactive enough to cater to the global telecom industry demands. Mr Pekka Stahlberg, Head, Supply Chain, Nokia India, said component suppliers needed to understand the requirements of the telecom industry and get “technically industrialised”.

Speaking at Connect 2007, a two-day seminar organised by the Confederation of Indian Industry on ‘ICT: Innovation through integration - Building an inclusive ecosystem’, he recollected his recent visit to an electronics component suppliers exhibition held at New Delhi. After meeting 45 suppliers, Mr Stahlberg realised “they had very little to offer. We would like an industry body to guide them into doing business with us. We are keen to source components locally,” he told Business Line post the session.

Nokia India assembles imported components at its Sri Perumbudur plant and this activity contributes a mere five per cent (in value) to the total product (mobile phone) cost. Considering there are 500 million mobile phone subscribers in India, even a five per cent value add is worth a large business opportunity, he said.

Mr Stahlberg felt if small companies invested in technology and scaled up volumes, they could supply not just to Nokia but also to other mobile phone makers. “We could have SEZ to SEZ trading for component supplies, if suppliers are located outside our SEZ,” he added.

Mr A. Henry Mohan, General Manager, Motorola India, said Indian manufacturing needed quality and discipline and shared Motorola’s experience in setting up a unit in China. The Chinese government had mandated that 10 per cent of components be sourced locally. “When we sought suppliers, we found their produce short on quality and decided to hand hold them,” he said.

About 30 companies were helped and over a period of time these suppliers changed the impression of China from a low quality output destination to a reliable manufacturing base.

Motorola India sources over 10 per cent (in value) of its finished product locally. When asked if Mr Henry would replicate the China approach here, he said he would if there was similar local mandate on sourcing.

Later today, Mr Jainder Singh, Secretary, Information Technology Department, Union Ministry of Communication and Information Technology, said the Centre was putting together a policy to facilitate growth of hardware manufacturing in the country.

“Our hardware imports (at $15 billion) are half our software exports (at about $31 billion). We cannot let these two aspects match as it would affect productivity in other areas. Hence, we are looking at an inclusive policy,” he said.

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