Aakash 4 derailed? Indian vendors say government's expected price may be unfeasible

India’s Aakash 4 tablet looks to be in trouble already and the project is still to see a bidding process. In December, we reported Telecom Minister Kapil Sibal saying that the next-gen Aakash, the fourth iteration of the low-cost tablet, would be cheaper than any of the previous editions and that production will begin this month. However, many manufacturers have expressed reservations regarding the high expectations in terms of specs and the low price recommended by the government.


Sibal mentioned at the time that 18 companies have joined the bidding process. Financial Express reports that companies such as Dell, Acer, HCL, Hewlett-Packard, Microsoft and Intel have shown interest in the project, the tender for which closes on January 28. In addition, Datawind, Micromax, WishTel and ITI are also expected to join the tender process. In addition, it's also being reported that some companies may form consortia to jointly produce the tablet, which could help eliminate delivery delays and help bring the price down as each company leverages their existing supply chain relationships. But the crux of the issue remains that the government’s recommended specifications are a bit too high to fit under the Rs 2,500 per unit mark.


Contrary to the Financial Express story, PTI says some international companies have withdrawn from bidding as they will be unable to comply with certain rules incorporated in the tender, whereby tablets for supply to central government should have at least 30 per cent of components made in India. The government requires the Aakash 4 to be manufactured in India with 30 percent value addition by March 2014 and 35 percent after that. “All participants are talking to each other for their expertise and getting together to produce Aakash 4,” said Suneet Singh Tuli, CEO, Datawind, but that could be a bit of a dampener for non-Indian companies, who will see little value in such a venture.


Tuli also believes it would be a challenge to supply the device at Rs 2,500 a unit due to rupee volatility and other factors. "We will be able to bid for Aakash 4 at a price below Rs 2,500 a unit. However, it is a challenge to maintain it at that level. We have seen fluctuation of about 20 per cent in the value of rupee and the uncertainty remains.


Technical specifications recommended by the government include a 7-inch scratch-resistant capacitive touch display, Wi-Fi, 2G, 3G and 4G connectivity (presumably on different variants), 4GB internal storage, an external memory card slot with storage capacity of up to 32 GB, and a front camera. In addition it must also have 1GB of RAM and a dual-core processor. It must also run an open source operating system that allows flexibility for users and manufacturers.


Domestic handset maker Simmtronics, which has also expressed interest in bidding, said its price will be competitive, but it would need special concessions from the government. "Low quality products will fail to qualify technical bids. We will qualify but maintaining desired price level in present form is a challenge as most of the components are imported. There are duties on components which should be waived as Aakash 4 will be supplied to government," company's Managing Director Indrajit Sabharwal said, adding that multinational chipset companies have approached it to supply processors at minimal cost.


Another company, which plans to set up manufacturing unit in the country, said it does not expect a quality product can be supplied for Rs 2,500 as desired by Sibal. "Government wants talk time of 20 hours which even high-end phones don't give. It’s not possible to match price as desired by minister (Sibal)," a top official of a company, which partnered with a PSU for selling tablets, told PTI.


Another vendor which plans to bid expressed disappointment on lack of government support for the project. "We have been asked to quote price of product but have not been informed about the number that we need to supply. There is a huge risk and we expect only 4-5 companies to bid for this project," a company official said.


With inputs from PTI

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