Why Is India A Key Growth Market For Cisco’s John Chambers?

by CXOtoday News Desk    Jun 30, 2014

john chambers

With the arrival of the new government at the Centre, global networking major Cisco Systems is optimistic about its growth and expansion plans in India. John Chambers, Chief Executive and Chairman, Cisco, who is looking to build smart cities, enable digital inclusion and set up a manufacturing base in India, calling the country as its “second world headquarters,” has expressed that a more transparent tax regime would encourage foreign investors to set up units in the country.

Boosting electronic manufacturing

Chambers said Cisco is looking to set up a manufacturing base in the country. He stated that India’s contribution to Cisco’s overall revenues would grow five per cent thanks to the strong demand for cloud and networking services. Appreciating the quality of Indian engineers, Chambers said the manufacturing sector is expected to grow here with consistent tax policies and market access.

India currently has 600,000 English-speaking engineers. The National Policy of Electronics (NPE) aims to transform the Indian electronics manufacturing sector into a $400 billion industry by 2020 and generate employment for 28 million Indians.  The NPE, with its tax incentives and SOPs, will accelerate the industry growth rate from 16 percent per annum to 28.6 percent by 2020 and decrease the import ratio to 25 percent from around 45 percent, according to a report released by TE Connectivity.

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The Cisco Chairman held a meeting with Communications and IT Minister Ravi Shankar Prasad to discuss a range of issues and stated that it is keen to have a telecom equipment manufacturing unit set up in the country to reduce the dependency on imports and indigenize the telecom sector.

“We are very open… We discussed the possibilities of that (increasing presence here). Electronic manufacturing is something we can take a hard look at. We led electronic manufacturing in China 15 years ago and brought its concept,” Chambers said after meeting Industry Secretary Amitabh Kant.

Cisco invests about a billion dollars in India every year and has recently invested $40 million in a start-up to drive product innovation in the country.

Building smart cities

Cisco is also looking to partner with the Indian government in creation of smart cities. The BJP government had declared earlier its plans on creating 100 smart cities enabled with the latest technology and infrastructure and both see this as an opportunity.

A study conducted by consulting firm Booz & Company estimates that the country requires over 500 new cities over the next 20 years, to accommodate 700 million more city dwellers. The study states that in every one minute, 30 Indians will leave rural India for urban areas at present and by 2050, urban population will constitute nearly 50 per cent of the total population in India.

Read: Smart Cities Require A Collaborative Approach

The $48 billion company is already involved in the Delhi-Mumbai Industrial Corridor project, in which it is creating the information and communication solutions since February 2012. The cities of Guayaquil in Ecuador and Toronto in Canada are also putting Cisco and its certified partners at the heart of their urban planning initiatives, according to reports.

Enabling digital inclusion

The networking solutions giant is also looking forward to play an active role in enabling digitization of Indian economy and developing the country as a strategic business hub. “The more IT and business strategies are aligned, the better an organization will perform compared to its competitors,” Chambers said further noting that creating a successful digital economy requires collaborative efforts drawing on the experiences, ideas and ingenuity, as well as global innovation and experience.

The government he believes can play an important role in growing the digital economy as organizations will have to keep ahead of the pace of change to survive, especially with the emergence of newer technologies such as cloud, social, mobile and big data and analytics.

Read: What ICT Reforms Can New Govt Bring In India?

Experts believe that digital inclusion can help small and medium enterprises become more competitive, give a boost to key sectors like agriculture, infrastructure, education and healthcare and help in job creation in the country.