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India Attracts New Investments From Global Companies

Major international companies have recently announced several new investments in India. These investments signal India's growing importance as a global hub for the information technology industry, and also as an emerging manufacturing center.

The recent announcement by the world's largest computer services company, International Business Machines, that it will triple its investment in India by pumping in $6 billion has given a fresh boost to the country's thriving information technology sector.

IBM is the latest in a growing number of U.S. companies such as Microsoft, Intel and Cisco that are scaling up their presence in India. But IBM's $6-billion investment is the biggest in India by a multi-national company in recent years.

IBM has significantly expanded its operations in India since 2002 when it began using the low-cost country as a key base for delivering services to clients around the world. The company has also benefited from increasing sales in India's fast-growing domestic market.

Its staff strength has gone up nearly tenfold from about 5,000 four years ago to 43,000 at present - and is set to go even higher.

The company's chairman, Samuel Palmisano, says India and other emerging economies are increasingly becoming an important part of the company's success. He says the new investment will help create new software, research and innovation centers in Bangalore and Delhi.

"That money will be invested in large service delivery centers that will be exploiting our technology as well as the high quality work force in India connected to all of our service delivery centers throughout the globe. We will be creating a very large, and complex and sophisticated technology center to work on systems and infrastructure," he said.

An industry body says India's software-services sector is likely to grow by more than 25 percent this year, as companies take advantage of the country's vast pool of English-speaking and relatively low-wage technical workers.

The software sector is not the only one attracting fresh investment. Motorola has announced that it will invest $100 million to build a cell-phone and telecommunication equipment plant in southern India. The plant is expected to become operational next year.

The move is aimed at making deeper inroads into the Indian mobile phone market, which is adding four million new subscribers every month.

In the past year, several multi-national companies, such as South Korea's Samsung, have committed a total of $3 billion to making telecommunication equipment in India, as the country emerges as a fast-growing telecoms market.

Analysts say these investments underscore that India is slowly beginning to attract manufacturing investment from global companies, which have focused their attention on China and other East Asian countries.