Why China is driving the 'Made in India' tablet market

New Delhi: Even as the allegations and denials over the making of Aakash 2 continue, low cost tablet manufacturers like Datawind, Karbonn Mobiles and Micromax can never claim to be thoroughbred Indian brands. Not because they aren’t Indian enough, but, because the tablets they manufacture are unlikely to be completely made by local manufacturers.

The Aakash 2 - India’s supposedly indigenous tablet, also touted to be the world’s cheapest - was recently in the eye of the stormfor having allegedly procured 10,000 readymade tablets from Chinese manufacturers and passing them off as ‘Made in India’ tablets.

Datawind Ltd’s CEO Suneet Tuli, denied the allegations calling news reports “sensationalist” and “misleading”. He said the Aakash 2 was not imported from China but that the company’s Chinese contractors procured motherboards from designated suppliers there.

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The tablets, according to Tuli were “kitted” in China but “assembled” in India. “It means that parts for all the items were collated together in a kit in China, and then assembled in India,” Tuli told Firstpos t.

[caption id=“attachment_545654” align=“alignleft” width=“380”]  The new Aakash tablet[/caption]

Whether a tablet is partially or wholly procured from China, one thing is certain. Indian tablets will always be ‘Made in China’ - at least for the next few years -till India can develop and build its own manufacturing capacity in technology and electronics.

India’s low capacity in producing electronic items, high demand market and poor technological infrastructure, all coupled with China’s competency in the field, makes it difficult for India’s tablet market to survive without Chinese hardware support.

India’s tablet market share leader Micromax, which makes up 18.4 percent of the country’s tablet market also gets its processors and chipsets from China.

“Our tablet ecosystem is spread over three chipset genres, though I wouldn’t want to name them. But, all manufacturing (of components) is based out of China and a lot of design help is also from China,” Vikas Jain, business director, Micromax Informatics Ltd. told Firstpost.

According to industry estimates, the Indian tablet ecosystem is pegged at around 135,000 to 140,000 units per month, of which Micromax sells an approximate 45,115 units, according to company data.

In six months, since the release of its first tablet on April 20 this year, Micromax has sold 2,70,687 tablets of the five models itcurrentlyhas in the market. All of its five models have processors made outside of India.

“A couple of our tablets are completely made outside India because of the low capacity of manufacturers in here. They do not have the infrastructure to develop or manufacture enough tablets to supply into the market and meet its demand”, explains Jain.

Micromax acquires its chipsets mainly from AWT (All Winner Tech), Spreadtrum, Mediatech and Qualcomm. The company says that the contract allotment for its chipsets and other hardware is wholly based on the vision, self capability and ongoing sales of the product, and that that there is no conscious intent or mandate on the part of the company to favour a particular country or vendor. However, it’s likely that since most of its partners have huge operations in China, many of the chipsets it uses are manufactured there.

“I can’t give you an exact number of how many sub contractors our main vendor may employ in any particular country. Every chipset manufacturer has multiple factories, so to comment whether it is all from the US or South East Asia is difficult. But, all our enterprise partners have very big setups in China, so I won’t be surprised if most of these come out of China,” Jain told Firstpost.

Micromax says, that like other tablet manufacturers in India, it is trying to grow the country’s tablet market by putting more supplies into it, while also trying to develop better capacity and manufacturing units of its own. While getting an entire manufacturing system in place is a long and tedious process, it is possible to build it over the next five years and only when that happens, will India overcome its technological shortcomings, says the company.

“The India tablet ecosystem is one which we all are trying to build. There will be shortcomings but its our work to make sure that we create robust brands and manufacturing units that can hold up to the market’s demand eventually,” Jain said, adding that he is positive that the government’s initiatives towards the telecom and tablet space will help boost its prospects.

“Even the government is making an effort by way of constant engagements, tax SOPs, infrastructure - like subsidies on land, taxation, subsidy on capital equipment needed to put manufacturing in place, etc. To the naked eye results should be available in next 12 months,” he said.

Micromax said its research and development work is done in India at its Delhi and Gurgaon facilities in collaboration with its partners. It also works with its partners on the application of the chipset into a design - with the connectivity, chipset and mobile network part taken care of by its partners. The actual integration of all of the components to make it into a device/tablet is also worked on by the company.

While many Indian tablet manufacturers may shy away from conceding to openly using chipsets that are made outside India, Micromax’s Jain says there’s no shame in accepting that another country is more advanced than our own, in a particular field.

“The thing is India missed a particular period of consolidating our electronics manufacturing - which is where China took over. If we look around, a lot of technology and electronics comes out of China. So, in manufacturing they have progressed in leaps and bounds - and are far ahead of us,” he explains, saying there’s no room for bloated egos in business dealings.

“You have to acknowledge superiority and at the same time build towards making it one’s strength,” he said.

A good lesson to learn for the Aakashs and Karbonns of the world, that claim to be ‘Made in India’. The truth is, they will continue to be ‘Made in China’ - at least for the near future.