India - A Global Manufacturing HUB

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Case Details:

Case Code : BREP010
Case Length : 14 Pages
Period : 1995-2004
Pub Date : 2004
Teaching Note : Not Available
Organization : -
Industry : Manufacturing
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"It's cost-effective for us to manufacture in India. There's no reason why we cannot replicate the China experience here."¹

- Ash Bharadwaj, Chief Operating Officer, Flexitronics².

The Hardware Opportunity

On September 05, 2003, Samsung India Electronics Limited (SIEL), the Indian subsidiary of the South Korean electronics major – Samsung Electronics Company Limited,³ (Samsung) inaugurated its refrigerator manufacturing facility in Noida in the state of UP in India.

The $25 mn, 5,00,000 unit capacity plant was only the fifth refrigerator facility of Samsung, the other four being located in South Korea, China, Thailand and Mexico. Since 2001, SIEL has also established plants for manufacturing air conditioners and washing machines in India. These moves have helped the company significantly in gaining market share in the home appliances industry in India.

Like Samsung, several global companies operating in diverse industries have shown growing interest in setting up world-class manufacturing facilities in India to cater to the domestic market as well as for the export market.

Market Research Firm IDC estimates that by 2007, the total market potential for the hardware manufacturing sector in India will be worth more than $150 bn. The hardware products considered include PCs, servers, hand-held devices, work stations, storage devices, peripherals and data communications equipment.

Since IDC has not taken account of hardware for consumer electronics and automotives, the figure inclusive of these is likely to be much higher. The demand for hardware, telecom and consumer electronics products in India has been rising fast. For instance, in 2003, there were 28.6 mn mobile telephony subscribers in India, a 244% growth from the 2002 figure of 11.1 mn.

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1] Vidya Viswanathan, "Hardware's Rs 75,000 crore opportunity," Business Today, February 29, 2004.

2] Headquartered in Singapore, Flexitronics is the leading electronics manufacturing services (EMS) provider focused on delivering operational services to technology companies. With fiscal year 2003-04 revenues of US$ 14.5 bn, Flexitronics is a leading design, engineering, manufacturing and logistics company with operations in 30 countries.

3] Samsung is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies. In 2003, its sales touched US$ 36.4 bn and net income was US$ 5.0 bn.