Motorola to make handset in India

In a turnaround of sorts, Motorola Inc. on Wednesday said it will soon make available a handset sporting a “made in India” tag and hinted at potentially more manufacturing work to come to India. The company said that Indian-made Motorola C115 phones, handsets that are already on the market but manufactured elsewhere, will begin to be sold starting in mid-December.

During a visit to India in August this year, Edward Zander, chairman and chief executive officer of Motorola, largely ruled out any plans to manufacture equipment in India, adding that the company would only consider manufacturing in India if Motorola’s sales volumes take off there. Speaking to reporters in Bangalore during his visit, Zander said that Motorola might look at some “back-end assembly” in India, as opposed to the full manufacture of products.

Motorola’s announcement is that it will assemble the C115 mobile handset in India, as a first step in “a multi-phase manufacturing strategy being deployed by Motorola in India.” The move is likely to have been influenced by a decision last month by two of the country’s large telecommunications services companies, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) to make it mandatory for its suppliers to manufacture equipment directly in India or through contract manufacturers in the country.

While BSNL in Delhi is fully government owned, MTNL in Delhi is majority owned by the Indian government.

A Motorola spokesman declined to comment on whether the company’s decision to make phones in India was influenced by the decisions of BSNL and MTNL.

Motorola also declined to elaborate on the company’s future plans for manufacture in India, except to say that the C115 phone will be available with the made in India label next month. It is not clear whether Motorola will only assemble the phones in India or if it will do other component manufacturing work related to the phone in India. In addition, it is not known whether Motorola will make the phones itself or contract their assembly.

Also on Wednesday, Motorola said that for the first time, it was introducing a new model in India before launching it in other countries. The L6 will first be sold in India and will become available to other markets later. The L6 is similar in design to Motorola’s popular RAZR phone and includes a video camera, digital audio player and Bluetooth.

Motorola also said that it formed a distribution agreement with Bharti Teletech Ltd., which has 11,000 distribution channels in India.

A number of multinational telecommunications companies including Nokia Corp. have announced plans to manufacture in India. Developing markets like India are becoming increasingly important to mobile phone makers as the more developed markets worldwide grow increasingly saturated.

Vodafone Group PLC, which recently bought a share in Indian operator Bharti Tele-Ventures Ltd., estimates that just 6 percent of the potential market in India has cell phones. In August, Gartner Inc. said it expects mobile penetration in India to reach 30 percent, or 300 million connections, in 2009.

That growth is partly driven by government initiatives. The Indian government is planning to have 250 million telephone connections — both wired and wireless — in India by the end of 2007, which would take telephone penetration in the country to 22 per 100. It is also aiming at providing broadband connectivity to 10 million subscribers by the end of 2007. The country had 104.22 million telephone connections, and the telephone penetration was 9.61 per 100 at the end of June this year, according to the Telecom Regulatory Authority of India in Delhi. BSNL was the largest service provider with 47.5 million connections, while MTNL had about 5 million subscribers.