Flextronics to invest $100 m for Chennai park

Singapore's Flextronics is to invest about $100 million (about Rs 440 crore) over five years to create an industrial park near Chennai. Initially, the company plans to make telecom equipment at the unit.

In addition to Flextronics' investment, some of the company's supplier base would move in to the park and bring in additional investments.

Flextronics today signed a memorandum of understanding with the Tamil Nadu government to set up its industrial park on a 200-acre plot in Sriperumbudur, near Chennai.

The land is a part of the industry supplement Flextronics' large presence in the Indian software industry (the company has more than 5,000 employees in India today).

Generally, a low cost manufacturing locations such as India would lower costs by 15 per cent to 20 per cent in hardware manufacture.

Flextronics CEO Michael Marks has in the past said once low-cost software work for electronics was brought in to the picture, the overall costs would come down sharply.

Flextronics officials said the entire Indian operation, manufacturing and software, would work in an integrated manner. Flextronics officials emphasised that the size of Indian telecom and electronics market was a key consideration in expanding their base in India.

Flextronics has an existing global manufacturing relationship with Nortel. In India, the company is expected to make good Nortel's commitment to have manufacturing operations in India to fulfil its obligations made along with the successful bid for BSNL's telecom networks.

Tan announced that the electronics manufacturing investment in India would be supplemented by the transfer of the $ 15.9 billion company's finance and human resources operations to its captive BPO in Chennai. The BPO's operations would be scaled up in phases.

Tan said that the other locations where Flextronics considered setting up the industrial park were Pondicherry (it already has an assembly unit there) and Bangalore.