Handset makers' local sourcing to be 40% by 2007

Local sourcing of domestic handset manufacturing is set go up to 40 per cent by the end of 2007. Now, assembling is on and the sourcing will move up to 5-10 per cent by the end of the current year, according to Rajiv Kochhar, chief executive officer, Avista Advisory.

Investment banking and financial services company, Avista Advisory, advises multinationals, including component vendors, on their India foray.

It was instrumental in bringing to India Elcoteq SE, the electronics manufacturing services (EMS) company which was the first to set up a handset-manufacturing base in the country in 2004.

Avista, which works with Finland-based Berhan Ltd on advising multinationals in establishing their operations in India by evaluating opportunities, is currently in talks with 10 component vendors in the US, Japan, China and Europe.

Berhan and its associate in China, which is negotiating with Chinese component suppliers, are currently planning to develop a footprint in Japan, as well.

The 40 per cent localisation, when achieved, will mean a substantial investment in the telecom industry in India. Refusing to put a figure on how much investment it would entail, Kochhar said a telecom manufacturer would require two printed circuit board (PCB) vendors, with one PCB plant alone involving an investment of $75 million.

"The market is here, and the entry of original equipment manufacturers (OEMs) and EMS firms has already happened. What is left to be implemented is the supply chain, which is important to achieve cost reduction. Our work is to develop the telecom supply chain in the country for local manufacturing to be efficient," said Kochhar.

Right now, chargers and PCBs are being sourced locally. Printing and packaging have also begun. Next will be light-emitting diodes and moulding and plastic sourcing, he added.

Earlier, Avista Advisory worked with Nokia's component suppliers on setting up their manufacturing units in India.