Dell Says India May Become New Technology Manufacturing Hub

March 26 (Bloomberg) -- Dell Inc. Chief Executive Officer Michael Dell said in a conversation with Indian Prime Minister Manmohan Singh that the south Asian nation is poised to become a technology manufacturing center.

The remarks came this week during a discussion with Singh about ways to boost hardware manufacturing in India, Dell spokesman David Frink said in an interview. The company denied an account of the discussion by Singh, who said Dell may be looking for a “safer environment” than China.

“With the right kind of progress, Mr. Dell said that he believes India also has an opportunity to become a hardware manufacturing hub, generating employment and adding to that country’s impressive growth,” Frink said.

India, Asia’s third-largest economy, needs to spend $1 trillion on roads, ports, power and other infrastructure between 2012 and 2017 to help accelerate economic growth to 10 percent and cut poverty, Singh said this week. Getting computer makers like Dell to invest in India rather than China is “an area where there are immense opportunities,” Singh said in a March 23 speech to members of India’s Planning Commission.

Singh and Dell met a day after Google Inc. started routing China-based users to an unfiltered search service on its Hong Kong site. The move capped a standoff between China and Google, which in January said hackers in China stole data and targeted the e-mail accounts of human-rights activists.

‘Safer Environment’

Singh later said Dell was considering shifting purchasing of components from China to a “safer environment,” according to the text of the Indian official’s speech released by India’s Press Information Bureau. Dell denied that account and the Web site for the Press Information Bureau, where releases of Singh’s speeches are posted, no longer has a copy of the remarks.

“There was no discussion concerning any change in how or from where Dell will source component parts for the computers it manufactures in Asia,” Minari Shah, a Dell spokeswoman, said in an e-mailed statement. Harish Khare, a media adviser to Singh, declined to comment.

Dell said it has no plans to abandon its partners in China. The company currently spends about $25 billion a year on components from suppliers there.

Companies besides Google have been reluctant to publicly criticize China, the world’s third-largest economy, over the country’s Internet policies and alleged human rights violations.

Biggest, Fastest

China accounted for more than 60 percent of all PCs shipped in the Asia-Pacific region last quarter, according to Gartner Inc. Shipments in that area climbed 44 percent, the fastest rate among the regions surveyed, according to the Stamford, Connecticut-based researcher.

Still, India has lured technology investments as companies tap into its well-educated workforce. Dell has a design center in Bangalore. In 2007, the company opened a manufacturing and distribution hub in Chennai, according to the company’s Web site.

Rival Hewlett-Packard Co. also operates a research lab in Bangalore, as does Microsoft Corp., which opened a research lab and software development center there in 2004.

Cisco Systems Inc., the biggest network-equipment maker, said earlier this month that it plans to boost its workforce in India faster than anywhere else to meet surging data traffic. CEO John Chambers said the number of employees is projected to rise to 10,000 from about 6,000 today, though he didn’t specify a timeframe for the expansion.

Not Zero-Sum

Dell should consider expanding manufacturing in India since it is a key market for its products, said Ashok Kumar, an analyst at Northeast Securities Inc. in New York. He doesn’t own any Dell shares.

“India and China both see themselves as competitors for this economic opportunity, so it doesn’t have to be a zero-sum game,” Kumar said. “By sourcing and having larger manufacturing in India, they’re better positioned to service the local market.”

Dell, based in Round Rock, Texas, fell 12 cents to $14.87 in Nasdaq Stock Market trading yesterday. The shares have climbed 3.6 percent this year.

India and China are two of the fastest-growing markets for Dell, which has been working to revive sales and profit after losing top rankings in the PC market to Hewlett-Packard and Acer Inc. over the past three years.

Sales in India were about $1 billion, or 2 percent of Dell’s total revenue. Dell is No. 2 in that market with a 13.6 percent share in the fourth quarter, according to researcher IDC, compared with Hewlett-Packard’s 16.2 percent.