The Hindu : Business : Nokia's foray into Chennai a beginning: Dayanidhi Maran

Online edition of India's National Newspaper
Monday, Apr 11, 2005

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Nokia's foray into Chennai a beginning: Dayanidhi Maran

By N. Ravi Kumar

Dayanidhi Maran

CHENNAI, APRIL 10. The constructive approach of the United Progressive Alliance Government to attract investment in the manufacturing sector is making leading global telecom and communication equipment majors, including Intel Corporation, Motorola and Nortel, consider setting up production facilities in India.

The decision of mobile handset giant, Nokia, to establish its tenth global manufacturing unit near Chennai is just the beginning: the Union Minister of Communications and Information Technology, Dayanidhi Maran, says at least three more leading telecom equipment manufacturers are giving shape to their India plans.

Incentives galore

Driving the confidence of the firms, many of whom will rope in their component suppliers too, is the cost-effective workforce, a dynamic telecom market, and the facilitation measures of the Centre, including those aimed at making the domestic products competitive.

"All these MNCs look for a very good deal and other incentives," Mr. Maran told The Hindu here on Saturday, pointing out that Intel had finalised its plans for a manufacturing facility in Chennai. "They are waiting for the Special Economic Zone (SEZ) policy to be announced." The world's largest chip maker, Intel is also a leading manufacturer of computer, networking and communications products.

Noting that he had assured the Intel Chairman, Craig R. Barett, during their meeting last year of fast track arrangement for the project, Mr. Maran said an inter-ministerial task force, comprising officials from the Telecom, Commerce and Finance Ministries, was formed by the Centre to coordinate all the issues pertaining to the Nokia project, including with the State Government.

On the product-specific SEZ status sought by Nokia, the Minister said the company would make a formal request on the concessions after a meeting of its Board of Directors in India on May 11. The Union Budget (2005-06) decision to levy a four per cent countervailing duty on the import of ITA (Information Technology Agreement)-bound items and their inputs that attract nil duty came as a reassurance to Nokia, which also wanted support from the State-owned telecom corporations. The levy played an important role in changing the decision of Nokia — since mobile imports to India were cheaper, it had earlier planned to set up the facility in Malaysia.

Tamil Nadu was also able to provide the necessary infrastructure support, Mr. Maran said, adding that Noida, Bangalore, and some locations in Maharashtra were in the running for Nokia's plant. What tipped the scales in Chennai's favour was the availability of sea and airports. Apart from marketing Chennai on these two counts, "I organised a meeting [for Nokia executives] with the Civil Aviation Minister, Praful Patel, as they wanted more warehousing facility." The clearance of the proposed privatisation of Chennai airport by the Prime Minister's Office was another "positive point."

Growing domestic market

The major attraction for the equipment manufacturers, however, was the growth of the Indian telecom industry. Approaching a subscriber base of 100 million now, the country will have an additional 150 million connections by 2007. Stating that his Ministry was keen on the domestic manufacturing sector meeting much of the demand, Mr. Maran said the State-owned Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited were going to change their tender policy. "They are going to insist on the suppliers having domestic manufacturing," which would also help them with a good service backup.

Other initiatives of the Ministry to help the industry shift from its predominantly import-dependent status included facilitating a telecom equipment manufacturing tie-up between Alcatel and Indian Telephone Industries at Rae Bareilly; and an agreement between Alcatel and C-DoT (Centre for Development of Telematics) for a global research centre on Wi-Max technology in Chennai. Motorola had been urged to manufacture its low cost mobile phones in the country, while Ericsson, which was setting up a mobile base station unit in Rajasthan, was looking at other States "who can give them good support and incentives."

Declaring that the UPA Government was "not going to sell off BSNL and MTNL," the Minister said that BSNL alone would be providing 70 million connections by 2007. The bulk of these would be provided in rural areas and smaller towns. "Our focus is on bridging the rural-urban digital divide, especially by making mobile phones cost-effective for the rural population," Mr. Maran said.

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