The Indian PC market, now at around 5m units a year, is set to double in the next few years. It's already the fastest growing market in the Asia-Pacific region. No wonder that PC manufacturers are making a beeline for setting up shop and expand their presence in the country.
Dell, which has less than 4% market share in India, has firmed up plans to set up manufacturing unit in India by the year-end. Rival Lenovo is planning to expand capacity from 0.6m units to 1m units. Home grown HCL Infosystems, too is planning to set up extra capacities.
While Dell's planned capacity is not known yet, this will be its 10th facility in the world and the fourth in Asia (it has one in Malaysia and two in China). Lenovo's capacity expanion will be at its existing facility in Pondicherry. HCL Infosystems, which recently hiked capacity from 0.6m to 1m units per year, is planning to churn out 1.4m computers (both desktops and laptops) a year, by putting up additional capacity.
Says MAIT executive director Vinnie Mehta, “The opportunity in India is huge. The PC market is growing at 25-30% a year. In '04-05, 3.6m PCs were sold in India, and we are likely to close '05-06 at over 4.5m PC sales.'' Laptop sales in the counry, about 0.4m units a year are growing at 100% while desktop sales are growing at around 28-30% a year.
Incidentally, the share of the assembled market has fallen to under 35% from over 60% just couple of years back. Duty cuts, aggressive pricing strategies, penetration into the heartland and better service network have resulted in branded players eroding the assembled market share.
The erosion of the assembled market share is also driving branded players to increase capacity. Says Dell vice-president and general manager (South Asia) Paul-Henri Ferrand, “The India unit will help us meet local demand within five days. To begin with the focus of the India manufacturing unit will be on desktops as 85% of the Indian computer market comprises desktop sales.''
For Dell, it is critical at this point in time to have a unit here as it seeks to increase its market share from the present under 4%, behind market leaders, HCL, HP and Lenovo.