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Is Apple Paving The Way For High-End Design Work?

Industry bodies believe while more and more mobile companies will start manufacturing in India, the extent of value addition is the correct measure for success in manufacturing

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The news that US-based Apple Inc is set to start manufacturing iPhones in Bengaluru has recently hit the media headlines mainly because it involves two big names. One is Apple and the other is iPhone. Beyond that, manufacturing of smartphones in India is not something quite new and Apple is in fact one of the latest entrants to the 'Make in India' club.

India is home to some 40 mobile manufacturing plants with Chinese companies like Xiaomi and Gionee already making their handsets at Foxconn Technology group's plant in Andhra Pradesh. Domestic companies such as Karbonn, Lava, Micromax, Intex, Jivi, iTel, and MTech too have set up their manufacturing plants in the country.

"The ecosystem for mobile manufacturing is already present in India and we will handhold them and help them," says Amitabh Kant, CEO, NITI Aayog.

In that context, does Apple's entry to the Indian manufacturing ecosystem make any difference? Analysts believe it does. According to Anshul Gupta, Research Director, Gartner, Apple could pave the way for high-end design work which would lead to generation of several high-skilled jobs in the country. So far, manufacturing of smartphones has been limited to just assembly work, he said. Manufacturing in the true sense involves making components such as processors, cameras, and touch screens as well.

Research firm Zinnov agrees that Apple deciding to 'Make in India' will be a huge boost to the industry. "Apple is one of the largest global corporations and one of the most loved consumer brands when it comes to design. This will be hugely encouraging for other companies, specifically in the B2C segment to start considering India for manufacturing their products," says Praveen Bhadada, Partner & Practice Head, Zinnov.

A statement from the government of Karnataka stated that it welcomes Apple's proposal to commence initial manufacturing operations in Karnataka. "Apple's intentions to manufacture in Bengaluru will foster cutting edge technology eco system and supply chain development in the state, which are critical for India to compete globally," the statement said. The government said it is committed to new initiatives in any sector for manufacturing and will provide an environment conducive for investment.

Industry bodies believe while more and more mobile companies will start manufacturing in India, the extent of value addition is the correct measure for success in manufacturing. "Today the value addition may be in the range of about 10-25 per cent depending on what each is doing in their manufacturing line. But with the correct measures in policy enablement and right level of investment, it is possible for these manufacturers to take the value addition to more than 50 per cent in the near term," says K. Krishna Moorthy, Chairman, IESA (India Electronics and Semiconductor Association).

"Eventually, except the high-end components which will require specialised very high cost fab capacity, we need to increase the value addition in a calibrated way to make all others in India. IESA is focusing on the present disabilities that we need to address along with the policy makers and the ecosystem to achieve this."

According to IESA, high-end design work is already happening in India in the semiconductors space. "Many of the captive R&D centres of the multinational companies are doing high-end product and IP development out of India. What started two decades ago in semiconductor as Verification, Validation and Testing has now gone all the way to core chip level product and IP design including architecture definition and everything in between. This is now followed by some amount of product development at the system level," Moorthy said. "With Apple setting up manufacturing in India, it will spur a good amount of sub systems work over a few years to come. This is what happened even in automotive Industry."

Foreign companies are increasingly investing in India to tap the skills necessary for designing smartphones. In January this year, Taiwan-based fabless semiconductor company MediaTek collaborated with the Indian Ministry of Electronics and Information Technology (MeitY) and Indian Cellular Association (ICA) to launch its 'Smartphone Design Training Program'.

The training program, an industry first, was designed to help the Indian government address the strong demand for smartphone design talent and supply the necessary skills. "It also creates a platform for MediaTek and its global ecosystem partners to collaborate with Indian companies and build closer partnerships to create new, Indian designed products for its home market," MediaTek said.

In 2015, global chipset maker Qualcomm launched its 'Design in India' initiative in association with the National Association of Software and Services Companies (NASSCOM). Qualcomm's 'Design in India' aims to encourage the creation of a product and hardware design ecosystem in India in the smartphones, tablets and Internet of Everything (IoT) products category.

Qualcomm's 'Design in India' challenge provides an opportunity for startups to demonstrate their hardware designs for products such as smartphones and tablets. The shortlisted companies are then eligible for the prototyping phase and offered a funding of $10,000 each. After a successful round one of the Qualcomm 'Design in India' Challenge 2016, the company has now announced its second chapter.

"In our unrelenting commitment to PM Narendra Modi's vision of transforming India into a digitally empowered society, 'The Qualcomm Design in India Challenge - II' will extend an opportunity to 20 startups in two incubation cycles, with a primary focus in the domains of Smart Infrastructure, Biometric Devices, Payment Terminals, Agricultural Technology, Medical Technology and Rural IoT," Qualcomm said.

As evident from the umpteen manufacturing units, India is already a manufacturing hub. Prime Minister Narendra Modi's vision of 'Make in India' has come a long way to becoming a reality today. Tomorrow is all about high-end design. India is gradually moving up the value chain and is on track to becoming the design hub of the world. 'Design in India' is here!

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