Nokia, Motorola plan handset units in India

Leading mobile handset makers like Nokia and Motorola could soon follow LG in setting up manufacturing operations in India.

A Motorola India official said the company is seriously considering manufacturing mobile phones in the country.

"We're definitely looking at it, given the market size in India," he said. But he added that the process was still in the exploratory stage and no time-frame has been set.

A Nokia India executive also said that India was a manufacturing option for the company.

India is already an R&D hub for Motorola's mobile technology requirements, and close to 60 per cent of the software used on all Motorola handsets is made in India.

Yesterday LG Electronics became the first multinational company to firm up its handsets production plans in India by committing an $60 million investment. The plant is set to become operational in 2005 and by 2010 LG is expecting a production of 20 million units.

The CEO and president of Samsung's global digital imaging business during his recent address at the India-Korea summit too hinted at the company's manufacturing intent by saying that India's growing telecom and electronic components prowess held interesting opportunities for the company.

Currently, India is the 6th largest mobile handsets market in the world with sales of more than 25 million units, and is expected to be among the top three by 2010 with an annual demand of 78 million units.

Earlier this year K R Kim, managing director, LG Electronics India Ltd had said that the company would consider manufacturing only if the government does not lower import duties on mobile phones further.

He had also remarked that as a rule of thumb, it would take an investment of about $7 million for an annual production capacity of a million units.

The Finance Minister had in his Budget this year, obliged by not drop import duty on handsets with an eye on attracting investments.

"The market here is undoubtedly huge, and we can cut down on the time to market by manufacturing here. But the absence of a uniform tax structure across states is likely to push up the prices of essentially lowcost phones that we would be looking to make in India," explained the Motorola official.