Roadmap for making India a global ESDM Hub Sanjay Nayak

Co-founder, MD & CEO,

Tejas Networks Ltd.

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• Industry with the largest growth potential

• ESDM products are used across many sectors Potential for $400 Bn

revenues in next 10 yrs

• No domestic industry, despite having large talent pool & a large domestic market

• Current base is only of low value-add manuf.

ESDM imports in India can exceed oil imports by 2017

• Currently it is <2% in India; In China >20%

• Large potential to increase value-addition ESDM manufacturing can

become 10% of GDP

• Communication and Strategic Electronics are key for protecting national security

National Security & self reliance in defense & telecom

• Inclusive- since it will create high-end as well as manufacturing jobs

Can create over 30 Lac new jobs

ESDM: A critical industry for India

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Importance of ESDM industry is well understood

• Government and Industry committed to growing this sector

• Unprecedented opportunity to build a large industry

• Leveraging India’s core strengths Talent Pool + Domestic Market

Supportive Government policies

• 12th Five year Plan, National Telecom Policy 2012, National Electronics Policy 2012 (all released)

• Preferential Market Access- PMA (notified)

• Electronics Manufacturing Clusters (cabinet approved)

• Innovation/R&D funding (in process)

• Component eco-system, M-SIPS, India Semiconductor Fab (in process)

• Fiscal incentives to overcome disability/handicap faced by domestic industry

Industry is gearing up

• Increased focus and investments happening

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All Stakeholders are aligned..

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Balancing Short-term Vs. Long-term

Tejas Networks Proprietary 4

Short term

PMA

Fiscal Incentives

Medium term

R&D Funding

M-SIPS

EM Clusters

Long term

Semicon Fab

Components

LOW Investment HIGH

HIG

H

Imp

ac

t L

OW

Need for a “Systems” Approach

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Components

(Semicon, Passives)

EMS (Assembly/Test)

Product Development

R&D, HW/SW

PRODUCT IDEA - INNOVATION

• Betting on the right technology and standards, features

• Innovative product design and architecture

R&D, PRODUCT DESIGN (SYSTEM + HW + SW)

• Creation of IPR (Product IPR; Patents)

• System design: Hardware, SW, FPGA/Silicon, Mechanics

• Product design, development, testing/verification

COMPONENTS

• Silicon components

• BarePCBs, Mechanicals, Cable Assemblies

• Passive components, Electro-mechanicals

ASSEMBLY (SMT), TESTING

• “Board stuffing”: automated; done by EMS or in-house

• Testing, final assembly and Quality assurance

• Logistics, Packing etc. 6

Understanding ESDM “Value-Chain”

30-65%

35-50%

5-20%

Leverage domestic demand using PMA

• Will provide the initial volumes required for domestic companies to reach global economies-of-scale and competitiveness

• Telecom: Next phase of growth to be driven by broadband: private operators launching 3G/LTE; Govt projects like NOFN etc.

• Defense/aerospace: India is one of the largest buyer globally

Establish initial success in India

• Promote entrepreneurship to create domestic companies in defense & telecom; Must target NRIs abroad who have the required experience

• India’s “Innovation Leverage”: 4X R&D for same costs as US/EU

• Enhance indigenous skills in core technology areas; target new standards

• Build on our strengths in high-end design services to create products and IPR

• Motivate MNCs to increase their value-addition from India

Expand globally- after initial success in India

• Chinese companies are facing strong headwinds- security and fair trade issues

• Indian companies can be trusted global partners in telecom and defense 7

Build on our strengths

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• Industry, Customers, Government, Academia

• Focus on “know-how” as well as “know-why”

• Need for harnessing talent from private sector

Synergize efforts from all stakeholders to work in a

complementary way

• Communication and Networking

• High-reliability embedded systems

• High-performance computing and avionics

• Encryption, Security

Identify key technology areas with maximum impact

(civil + defense)

• Expertise in System design, Fab-less designs, IPR

• Scale up component base (especially generics- PCB, Mechanicals, Electro mech., oscillators etc.)

• Upgrade EMS capacities

Develop the rest of the eco-system around these products

• Tap funding from Govt as well as private Investors

• Focus on life cycle: from R&D to successful commercialization in India as well as globally

Ensure adequate funding

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“Mission Mode”: next 24 months Leverage Telecom, Defense, Aerospace growth

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Strong alignment and commitment from all stakeholders to build a $400 Bn industry in THE next 10 years

Need to balance short-term, medium-term and long-term goals and policies

All stake-holders need to work in a “mission-mode” and get positive results in the next 24 months

Opportunity to leverage the strong domestic demand in Telecom, Defense and Aerospace

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Summary

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