$17 billion foreign investment going to Indian IT & telecom

Sufia Tippu
Thursday, 26 October 2006 17:18

IT Industry - Market

With global leaders such as Intel, Microsoft, Cisco, Nokia and Ericsson charting out ambitious expansion plans for India, the foreign direct investment (FDI) commitment in the telecom and IT sectors combined has crossed $17 billion over the last 20 months.

Against 28 companies that have outlined their investment plans, 17 have already infused a significant amount of capital. Companies whose units are already operational include Ericsson, Elcoteq, LG, Nokia, Alcatel, EMC and Xenitis.

According to the ministry of communications and IT, six companies have committed over $1 billion each towards their India operations. These include IBM’s $6 billion, Cisco’s commitment of $1.1 billion, SemIndia’s $3 billion proposed investment in its semiconductor fab, Intel’s $1.25 billion, Microsoft’s $1.7 billion, and SAP Lab’s $1 billion investment.

With India becoming an attractive destination for IT and telecom, the investment covers both manufacturing as well as R&D activities.

While Cisco’s investment, spread across its next generation network (NGN) lab at Chennai and e-governance networking projects is currently under implementation, SemIndia’s ambitious proposal for a public-private partnership for advanced semiconductor manufacturing is yet to take off in the absence of the government’s semiconductor policy.

Intel Corporation’s announcement of a multi-year investment for India, totaling over $1 billion, includes $800 million over the next five years towards business expansion, and $250 million towards Intel Capital Fund for investment in Indian technology companies.

Microsoft’s $1.7 billion investment covers R&D, education, governance and productivity, and is spread over four years.

IBM’s $6 billion investment plans include the expansion of its software, services and customer-support and also funding the new service delivery centers in Bangalore and a telecom research facility in New Delhi.

In the case of SAP Labs India, its $1billion investment has been channeled into R&D centers for development of software and software solutions, and system applications and products. These facilities are currently operational.

Meanwhile, the Prime Minister’s economic advisory council has projected FDI inflows to touch $8.5 billion in 2006-07, up 50% compared with $5.7 billion in 2005-06. However, the department of industrial policy and promotion has estimated a higher inflow with projected FDI inflows to cross the $12-billion mark in 2006-07.