Maker of inbuilt chip modules used for machine to machine communication devices, Telit Wireless Solutions has ruled out any plans for setting up manufacturing facility in India till India adopts the manufacturing policy.
The London stock exchange listed company expects to gain a market share of 40 per cent in India in the next four years but also said that it would source its modules from China where it has a manufacturing base. The government has yet to formally approve the manufacturing policy, which is still in its draft stages.
Telit expects to grab a share of 40 per cent in India riding on the increase in use of Unique Identity (UID) platform appliances used by micro finance institutions and reforms in electricity metering in India. Ashish Gulati, country manager, Telit, India said, “China has a strong manufacturing policy. We have manufacturing bases in Brazil, Israel, France as well as in China. For Indian market, we will source it from China. Manufacturing policy is still under discussion in India”.
Telit has two distributors for India and these distributors have warehousing facility in Singapore. Gulati, said, “We ship our products to Singapore where the Indian distributors have warehousing facilities. They in turn get it to India”.
The modules are used as raw materials by manufacturers of hand held devices, which are used for machine to machine communications. He added, “China is still competitive as far as manufacturing is concerned. The China base caters to the whole Asia Pacific region”.
Telit has a market share of 20 per cent in China and 70 per cent in South Korea. The company started its India operations last year and has set up an office recently in Bangalore. It plans to set up another marketing and technical support office in Bangalore by the year-end.
When asked about the impact of rupee depreciation on its manufacturing customers in India, he said, “They might be getting impacted, but it is small”. He said, the cost of modules has come down over a period of time and that is offsetting rupee depreciation impact. He added, “The initial cost of setting up the manufacturing base was large”. But over a period of time, the cost has come down due to scale economy and amortisation, said Gulati.
The current market size of India for machine to machine communication is expected to be very large as shops and establishments migrate to electronic transactions.Gulati said, “In the next four years it will grow 500 per cent”.