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Is Ericsson Looking to Make India Its Manufacturing Hub?

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Ericsson to manufacture in India

In the first part of the series, we saw that Ericsson (ERIC) is looking to expand in India (EPI). As part of its growth strategy, the company plans to build a plant in Pune, Maharashtra, to manufacture telecom (telecommunication) equipment for the global market. The company plans to initially invest around $15–$20 million on the plant, with operations scheduled to begin sometime in June or July 2016. The company may increase its investments over time.

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Telecom equipment spending through 2018

In July 2014, Infonetics Research estimated that telecom service companies would spend a cumulative $1 trillion on telecom and datacom equipment and software from 2014 to 2018. According to Infonetics, Ericsson is the third largest telecom and datacom equipment provider after Cisco (CSCO) and Huawei. Alcatel-Lucent (ALU) and ZTE (ZTCOF) follow at the fourth and fifth place.

Ericsson’s plan for the Pune plant

The Economic Times reported that Ericsson is considering manufacturing MINI-LINK Microwave Networks at the Pune plant. MINI-LINK is a microwave transmission system that optimizes traffic aggregation, which brings capacity savings for telecom carriers. In an interview with CNBC-TV18, Ericsson’s global CEO (chief executive officer) Hans Vestberg stated that the company plans to manufacture transmission equipment for the entire world from the Pune factory alone.

Ericsson already has a plant in Jaipur, where it manufactures radio base stations, media gateways, core nodes, and 3G and 4G broadband gears for the local market.

India’s investment in information and communications technology

Ericsson’s investment comes as the Indian government’s Make in India campaign aims to promote the country as a manufacturing hub. Under the campaign, the government is inviting foreign companies to base their manufacturing in the country.

Recently, Apple’s iPhone manufacturer Foxconn announced its intention to invest $5 billion over the next five years in India to set up factories and R&D (research and development) centers. Huawei Technologies also announced plans to open a plant to manufacture telecom equipment for the local market.

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