India hired Accenture Plc (ACN:US), the world’s second-biggest technology-consulting company, to help attract as much as $10 billion of investment in semiconductor manufacturing.
The government is seeking companies that can offer technology expertise and set up fabrication units, Accenture said in a statement yesterday. India, which has no chip factory, wants to meet growing demand for computer hardware and cut its reliance on imports, said Satya Gupta, the Bangalore-based chairman of the India Semiconductor Association.
The South Asian country, which is home to the chip-design units of Intel Corp. (INTC:US) and Texas Instruments Inc. (TXN:US), is seeking to replicate the success of countries such as Malaysia, Taiwan and China in semiconductor manufacturing. Sales of electronics and computers may surge 31-fold to $400 billion in eight years, according to estimates provided by the Ministry of Information Technology & Communications in New Delhi.
“Setting up factories is critical to the growth of the Indian economy, because demand for electronic goods is growing exponentially every year,” said Gupta. “It’s about time India takes that step forward.”
India is also trying to boost foreign direct investment to bolster flagging economic growth after gross domestic product expanded 5.3 percent in the quarter ended March 31, the slowest pace in nine years. FDI in the 12 months through March rose 35 percent to $46.8 billion from a year earlier, according to data provided by the government.
The global chip market is set to grow 7.2 percent to $322 billion in 2013 and 4.4 percent to $336 billion in 2014, World Semiconductor Trade Statistics said in a statement on its website yesterday.
Accenture will help the Indian government assess companies interested in building fabrication units locally and develop business proposals, according to the statement. Ajay Kumar, a top bureaucrat in the ministry, wasn’t available to comment as he was traveling.
India’s infrastructure, which lags behind those offered by leaders in chip making, may thwart plans by the government, said Kishore Suratkal, a semiconductor analyst with Religare Capital Markets in Hong Kong.
The World Economic Forum ranked the quality of India’s infrastructure at 89 last year, below Kazakhstan and Gambia. About one in four Indians don’t have access to electricity. Roads in the country are ranked worse than Botswana’s by the WEF.
“The biggest shortcoming would be India’s lack of infrastructure, though there’s no dearth of engineering talent,” Suratkal said in a telephone interview. “India has been trying to gain expertise in chip manufacturing for a long time.”
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