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November 4, 1999
International Business Machines today said its new PC manufacturing facility in Pondicherry would have negligible local content because India is not ready with core technologies used in making hardware.
"India needs to develop in core technologies," he said.
He explained that IBM would use India in what it is best. "India's strength is in software and services and we will leverage this in our e-commerce initiatives."
Domestic PC manufacturers recently launched a tirade against multinational vendors, blaming them for not contributing towards development of ancillary businesses.
Indian companies like HCL Infosys and Zenith went to the extent of going to the government and suggesting that the foreign vendors be given specific targets for localisation as in the case of the automobile industry.
Limaye said the IBM strategy for PC manufacturing would be to stock components and use them in assembling. The company can reduce the production cost.
However, he did not commit whether the cost reduction would be passed on to the consumer. "Prices of PC will depend on demand and supply," he said.
IBM says it has a 5 per cent share of the $1.5 billion PC market in India that it wants to increase it to 10 per cent with the setting up of the Pondicherry facility.
While the company would initially cater to the domestic demand, it would export to Sri Lanka and Bangladesh markets from the Indian manufacturing base.
As e-commerce is increasingly becoming an important business area for IBM, it would use its Indian resources for its worldwide initiatives.
The company has added 700 people to its workforce that has now gone up to 2,100.
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