MUMBAI, March 21, 2012 — Even though manufacturing the world’s cheapest tablet, Aakash, would have been cheaper in China than in India, DataWind CEO Suneet Singh Tuli explained that his company chose the "Made in India" tag more from a sales and marketing perspective, to build a compelling story around the product.
Tuli joined Asia Society India Centre at a public event here entitled Aakash: The World’s Cheapest Tablet and the Cost of the "Made-in-India" Tag.
The CEO told listeners that the idea of manufacturing the tablets in India at first met with considerable resistance because of expected delays, higher costs and the company's already-existing manufacturing facilities in China. The company nevertheless grappled with these challenges, and once it succeeded in manufacturing in India, Tuli decided to push its strategic advantage by formally asking the Indian Ministry of Human Resource Development to include a "Made in India" clause in their next tender for the tablets. Given that it is politically wise to manufacture the tablets in India, the Ministry responded to DataWind's request by saying the tablets should be fully indigenized.
Tuli explained that innovation will be driven from wherever manufacturing is done. In this regard, he believes that Silicon Valley has lost its advantage. It once served as the hub for technology while manufacturing centered in Detroit. Now, however, the manufacturing has moved elsewhere, and the so-called “grunt-work” (such as coding) moved to places like India. As a result, technology and innovation moved to these places as well.
Looking forward, Tuli predicted that the market for low-cost tablets in India will soon exceed the size of the PC-laptop market, and that one needs to be aware of how low-cost tablets cater to a different market segment from high-end tablets and computers — which means their performance should be assessed accordingly.
On the challenges of manufacturing in India, Tuli said that India needs greater "sophistication" to increase flexibility in manufacturing. In addition, most components are manufactured and consolidated in China, and Chinese manufacturers get credit from Chinese suppliers more easily. Indian manufacturers, however, often need to give cash up front. This becomes particularly problematic when some goods are delivered faulty, and the difficulty of shipping faulty goods back out of India means that the cost of those goods often isn't recovered. Finally, importing products often comes with duty exemption, but when manufacturing in one Indian state and transporting to another, an inter-state sales tax of 4% is levied.
Watch a video, above left, for further highlights from the discussion.
Presented in partnership with The Guild Art Gallery, Unltd. India and Bombay Hub