Hindu Vivek Kendra
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And now, Google designs chipsets in India! Nation emerges as serious player in tech industry

Publication: The Financial Express
Date: February 19, 2019
URL:      https://www.financialexpress.com/opinion/and-now-google-designs-chipsets-in-india-nation-emerges-as-serious-player-in-tech-industry/1491648/lite/?__twitter_impression=true

With others like Qualcomm also doing this, India is slowly emerging as a serious player in the tech industry.

Whenever electronics and IT minister Ravi Shankar Prasad talks of how the number of mobile phone manufacturing units has shot up from just two in 2014 to 123 right now—as a result, the bulk of phones sold in the country will also be made here soon—most point out that these are merely assembly units, and imports from China continue unchecked. While imports of mobile phones fell from $7.8 billion in 2014 to a likely $2 billion in 2018, overall imports, including components, shot up by over half, from $8.8 billion to $13.3 billion over the same period. Indeed, domestic value addition was just around 10% in 2017 and around 15% in 2018, with the government coming out with a sensible phased-manufacturing programme that increases import duties on a new set of components every year to promote local production.

What can increase domestic value addition quite sharply, of course, is the local designing of chips, even though the fabrication will continue to be done in countries like Taiwan that have fab units. According to a Reuters report last week, Google has hired a dozen engineers already to work on designing chips in India, and several more hires are likely. While the chip design at Google is a collaborative effort with the team at its US headquarters, it is a significant step; part of the process at Google to capture more value addition and not be dependent on companies like Qualcomm. How it pans out remains to be seen, but other firms like Qualcomm, Texas Instruments and Intel already have significant India offices with a few thousand engineers working on, amongst others, chip design and R&D. Indeed, Google already has 600-700 engineers working on machine learning and artificial intelligence and has larger plans for its Hyderabad campus which will, eventually, house 13,000 people. At 150,000, IBM’s India work force is larger than the one in the US.

And though China beat India in 2018, for two years before that, India was the world-leader when it came to companies setting up Engineering R&D (E-R&D) centres here. According to HFS Research, the total size of the E-R&D business in India—more or less equally split between captives and non-captives—has grown from $21.8 billion in 2015 to $26.9 billion in 2017. While China leads in several areas, India continues to lead in aerospace and defence with about a third of all such announcements of centres in 2018 for setting up facilities in India. Indeed, consulting firm Zinnov had projected that, by 2020, India would be home to 1,139 R&D centres with over half a million employees. With firms like SAP and IBM getting 8-10% of their global patents from their centres in India, the Zinnov projections look quite achievable. In the case of a firm like GE, that does a lot of work in India for instance, redesigning its portable ECG machine—in the India centre—helped lower costs from $10,000 to $500; the MAC 400 was later scaled up and taken to countries like China, Germany and even the US eventually. The successful completion of the Aadhaar project, and then the building of the IndiaStack applications on top of this, and the rapid and successful rollout of the UPI financial transfers have also helped buttress India’s image. Apart from India’s engineering talent, the fact that it is seen as a market where there are relatively few issues involving theft of intellectual property, as compared to China, is another attraction. Not bad for a country that, till recently, was not even recognised as a player, even if small, in the global technology space.
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