Japanese electronic giant Panasonic is becoming serious about its ramping up its operations in India. "For the first time, we have taken 150 Indian assembly line technicians to Malaysia for training in assembly manufacturing and quality control and another 150 are on their way," says Managing Director Manish Sharma.
This may not appear to be much on the surface of things, but Panasonic's initiative shows a growing confidence in Indian industry and skills and the need to invest in it. The recently forged National Policy on Electronics' could go a long way in further catalysing these kinds of efforts.
It helps that the country has a blue-chip reputation in design. "After all, India has 15% of the world's chip design happening here," says Dr. Ajay Kumar, Joint Secretary, Ministry of Communications and Information Technology. Broadly speaking, the industry comprises of VLSI design (transistors), embedded software development and hardware/ board design, all of which make up a $15 billion chip design industry.
From Qualcomm to Intel, the world's leading chip design shops have established their captive design centres in India. A lot of this is high-value work. Semi-conductor design firm Freescale's India Design Centre, for instance, has developed a world-class family of micro controllers for automation systems and complex medical applications. Even indigenous firms have increasing number of projects in chip development as compared to derivative chip design.
Much of this is possible thanks to India's engineering talent. There are 361,000 of them graduating from institutions every year that the electronics industry can snap up. But there don't seem to be many takers. "When I went to Birla Institute of technology (BITS) four years ago, I met 60 to 70 engineers who were keen to be placed in the hardware field," says Dr. Satya Gupta, a former senior Intel engineer based out of the US and now an entrepreneur and the chairman of the Indian Semiconductor Association (ISA). "But there were not enough jobs in the electronic industry to employ them. Instead, they gravitated towards finance and software," he adds.
The new National Electronic Policy is attempting to change that in radical ways by incentivising the development of a comprehensive electronics ecosystem. The initial disbursement of a modified special incentive package scheme (MSIPS) of upto Rs 5,000 crore is aimed at facilitating the formation of 200 greenfield and brownfield hi-tech clusters, along the lines of those in Japan and Taiwan, that will have word-class infrastructure, including port-to-factory linkages.
The idea is not to stop at design. "SMEs will participate in assembly, casing and accessories production - all of the associated activities that make clusters successful," says Dr Kumar. "These firms will do product development as well as local customising and will learn and move up the value chain by working with global partners," he adds. This could turn out to be a pivotal strategy in luring makers of electronics products. "In our industry, time to market is essential," says Vikas Jain, co-founder of Indian electronics firm Micromax. "In China you can ramp up production in 15 days," he adds.
For all of this to happen, however, you need two critical things: high quality research as well as skilled manpower.
The design sector involves a high degree of IP creation, and at first glance, India looks strong in its research skills. According to a paper produced by the ISA and Ernst & Young, the number of papers submitted from India has grown from 57 in 2005 to 95 in 2009, garnering 6% of global submission of IEEE papers, and outstripping China in growth of submissions. Yet, only 4.48% of them were accepted for publication compared to a 38% rate for the US, 34% for the UK and 15%, for China. This reveals a relative lack of quality in research work carried out in India, says the study.
The Ministry's response has been a huge push to increase the quality and volume of Phds-and therefore research-in the semi conductor space. The overall goal is to scale the number of Phds focused on chip design from 50 annually to 1,500 by 2017, and finally to 2,500 per annum by 2020 says Dr. Kumar. The policy will give these scholars 1.25 times their current support plus an annual Rs 30,000 housing allowance. Moreover, each institution gets 5 lakhs per fulltime Phd candidate per year for five years that is applied towards infrastructure assistance. Additionally, institutions also receive 1.25 lakhs per candidate for administration expenses.
There's also something in it for faculty. Around 400 of them will be given Young Research Fellows' awards of 5 lakhs per year for 5 years for research purposes. They will also receive Rs 20,000 per month in addition to their existing salaries. The policy is also structuring 31 Nodal Academies' via awards of up to 50 crore per institution in each state for the training of instructors as well as the development of appropriate curriculum. To ensure that the shop floor will not run out of manpower, a proposal is also underway to train a million students in high school and college in various skills across industry verticals through courses certified by industry.
If these policies are implemented synergistically, India finally has a shot at closing in on its large electronics deficit, creating competitive homemade electronics products and providing sorely needed employment for a growing population.