Lenovo plans to set up new plant in India

NEW DELHI: Lenovo, the world's largest PC maker and fifth-largest smartphone maker, plans to set up a new factory in India in an attempt to accelerate its business on higher growth.

The Chinese electronics giant will manufacture PCs as well as Lenovo and Motorola-branded smartphones. It also has a plan for exports. "The existing facility at Puducherry, which we had got as part of acquisition of IBM's personal computer business, has lost fiscal incentive and we have decided to set up a new factory. We are in talks with various state governments for the new investment," a top company source told TOI.

The existing PC facility at Puducherry has an annual capacity of 1.5 million units, but the company has decided "to move out" (to close it down eventually after the plan for the new factory takes final shape) as the tax holiday provided for the investment in the Union territory has ended. "There is not much benefit in staying there," the source said.


"Talks are on with various state governments and those on the radar are Telangana, Andhra Pradesh and Gujarat. We have also received interest from governments of Chhattisgarh and UP," the source said.
The company's mobile phones for India are being contract-manufactured by Flextronics, which is making them at Sriperumbudur. Lenovo is looking at having its self-owned facility for phones.

Lenovo will take a decision on the new premise "soon", the source said, adding that India is seen as a key focus market globally. "The plan is to develop India as one of the parallel manufacturing bases along with China for global requirements. This is important as the wage bill in China is going up, which has impacted manufacturing costs."

Lenovo's investment will come as a shot in the arm for government's ambitious 'Make in India' campaign which, among other things, aims at boosting manufacturing of electronics in the country.

Lenovo is estimated to have clocked a turnover of $2 billion in India last year, with PC and mobile handset business contributing roughly 45% each. The rest came from the tablet/server business.


Lenovo was top PC seller in India in the fourth quarter of 2015, with a share of 25.3% and was followed by HP with 23.3%, according to numbers released by Gartner. Dell was placed third with a share of 20.6%.

While being a leader in the PC market, Lenovo is more excited about smartphone business. The company has been growing rapidly here, and closed 2015 with sales of 9.6 million units and a market share of 9%. "The growth has been highly encouraging here, as the sales were 4.2 million in 2014 and market share was 4.5%," said Sudhin Mathur, director for smartphones sales at Lenovo Mobiles Business Group, which also takes care of Motorola's phones.

"We have been going strong in the phone business and hope to sell at least a million devices every month in this fiscal. We expect to move faster than the industry's estimated growth rate of 25% for this fiscal," Mathur added.