NEW DELHI: Dell Inc., the world’s second-largest maker of personal computers, urged India on 20 March to cut tariffs on computers if it wanted to attract more foreign investment.
Chief Executive Michael Dell also said the company would start up its manufacturing plant in southern India (Chennai) in July and expects revenues in the fast-growing Indian market to double to $1 billion (Rs4,400 crore) in the next few years.
“Dell in India is now a half-a-billion dollar enterprise in terms of local sales. Last year, it grew by 70% and we are rapidly heading towards $1 billion,” he told a news conference.
Dell also has manufacturing sites in China and Malaysia in a region where demand for computer hardware is soaring due to relatively low penetration rates compared with Western markets.
“We can scale up investment (in India) consistent with opportunities,” Dell said, but added high tariffs in India that push up the cost of a computer by 20% to 25% hinder investment.
“I think, to attract more investments from Dell and its suppliers, it is going to require changes in tariff structure,” he added.
As an example, one of Dell’s suppliers was investing $5 billion in Vietnam, and Dell said India could attract similar investments with a favourable tax regime.
In 2006, Dell said it would spend $30 million over five years to build a manufacturing plant in Sriperumbudur, on the outskirts of Chennai in southern India.
Initial production capacity was seen at an annual 400,000 units, but the firm said it expected to ramp up output rapidly and was looking to employ over 1,000 people.
Dell, which competes with IBM and Hewlett-Packard Co. and local firms HCL Infosystems Ltd. and Wipro Ltd. in India, said last year the new facility would help it raise its share in the Indian market from 7%.
The Dell chief said India is one of the centres of the world’s technology transformation.
He said: “We are about to see an evolution in technology like the world has never seen, and India will play a key role as the total number of people online goes from one billion today — or less than 16% of the world’s population – to two billion over the next few years.”
Starting off proceedings at the CII-CEOs forum, Gopal Srinivasan, Director, TVS-Electronics, and Regional Council Member – South, Confederation of Indian Industry (CII) said, “This is an opportune time for India to play its part on the global technology stage. Indian industry can gain much from interface with global business leaders like Dell, as also from his perspective on the impact of technology in rapidly growing economies like ours.’’
Dell said India currently has about 50 million people online, which is less than 5% of the population. He also said Internet use in the country has increased 700% since the year 2000.
Dell is awaiting permission from Indian authorities to sell computers online and plans to tap small businesses.
The company said in March 2006 it planned to increase its staff in India to 20,000 over three years from about 10,000. Dell has call centre operations, research and development activities, and computer and server sales business in India.
“Our operations continue to grow and we are adding more people,” Dell added.
Dell’s Chennai plant to start by July
The world’s largest computer maker Dell said its Chennai plant will become operational by July this year and was expecting its India revenues moving toward 1 billion dollar mark.
“Our Chennai factory will be operational by July,” the company’s founder and CEO Michael Dell said.
He said that the India factory would cater to the domestic market to start with. The factory would have the capacity of 400,000 units per annum.
When asked whether the capacity was too little in the Indian market for PCs that has touched 6.5 million units, Dell said that the capacity would be ramped up as the demand increases.