Ericsson pledges to invest million in India
Ericsson pledges to invest million in India
Ashok Bhattacharjee and Saikat Chatterjee, Bloomberg, New Delhi
Ericsson AB, the world's biggest maker of wireless networks,
will spend "several hundred million dollars" in India a year, an
investment that will include building a research center in the
southern Indian city of Chennai.
The company is investing about US$100 million in the country
at present and future spending will be linked to the growth of
the market, Mats Granryd, managing director of the Indian unit,
told reporters in Mumbai today. A "global services delivery
center" will also be built in India, the Stockholm-based company
said in a statement today, without mentioning the location.
Ericsson and rival equipment makers including Nokia Oyj and
Alcatel SA are banking demand in emerging markets such as India
to grow. India needs more than $20 billion of investments to
boost the number of mobile phone users to 200 million by end
2007, telecommunications minister Dayanidhi Maran said in
February. Researcher Gartner Inc. estimates mobile-phone users in
India may surge almost five times to 300 million by the end of
2009.
"India is one of the most exciting markets," Chief Executive
Carl-Henric Svanberg said in the statement. "We see immense
potential in this region and we are committed to partner with
India in this growth."
Ericsson follows telecommunications companies Cisco Systems
Inc., Alcatel and Motorola Inc. in setting up research centers in
India. Overseas companies are taking advantage of India's lower
wages and a large pool of technically skilled manpower to set up
research and development units.
Ericsson, Nokia and Cisco are increasing their investments in
India to get more orders. State-run Bharat Sanchar Nigam Ltd.,
which plans to spend $18 billion in three years to expand its
network, said it will prefer to buy equipment from companies that
manufacture locally.
In March Ericsson said it will spend an additional $50 million
in two years to upgrade its Indian manufacturing plant. It
employs 1,500 people in 22 locations in India.
Cisco, the largest maker of equipment that directs Internet
traffic, said on Oct. 19 it will spend $1.1 billion in India, its
biggest investment outside the U.S., to expand research and
sales.
Nokia, the world's biggest mobile-phone maker, will start
making network gear in Chennai next year to cut costs and boost
sales. The Espoo-Finland-based company also plans to make
handsets in the Chennai plant.
Ericsson forecast "moderate" industry growth next year, which
it defines as "high single-digit" growth. Gartner, based in
Stamford, Connecticut, in July raised its forecast for global
mobile-phone sales in 2005 for a second time to 779 million
units, compared with 674 million units sold last year.
Ericsson's Asia Pacific sales rose 20 percent in the third
quarter ended Sept. 30, led by "particularly strong" growth in
Australia, India, Indonesia and Japan.