New Delhi: Motorola Inc will invest $100 million to build a handset and telecom equipment plant in India in a move aimed at countering rival Nokia's dominance in the Indian market.
The US electronics maker said on Wednesday that it would start work on the plant with an initial investment of $30 million, which would be scaled up to $100 million in phases.
The plant will be built near Chennai.
The plant, which is expected to become operational next year, will make a wide range of handsets and other communications gear, a Motorola statement said.
The announcement follows plans by Nokia, which is setting up a handset manufacturing plant in India, also near Chennai, with an investment of $150 million.
An overwhelming majority of nearly 100 million mobile phone users in India prefer Nokia handsets over Samsung, Motorola and Ericsson.
The latest announcement by Motorola, based in Schaumburg, Illinois, is part of the company's efforts to boost its sluggish sales in one of the world's fastest growing handset markets.
India is adding 4 million new mobile phone subscribers every month.
During a visit to India last year, Motorola chief Edward Zander admitted the company had failed to seize the opportunity in India.
The company has since has entered into a distribution agreement with Bharti Televentures Ltd, India's largest cellular phone service provider and commissioned a handset manufacturer in India to assemble the C-115 handset - Motorola's best selling phone.
"India is a vitally important market for Motorola and as a strategic manufacturing hub offers a compelling value-proposition of best-in-class talent and strong cost efficiencies," the company statement quoted Executive Vice President Ron Garriques as saying.
"Our decision to make an investment of this scale is a reflection of our continued global commitment to connect the next billion customers."
The news came just a day after IBM, the world's largest computer services company, said it would triple investment in India to $6 billion over the next three years.
Industry experts said Motorola's decision is unlikely to make an immediate difference to its market share in India, but the results will become visible in the long term.
"It's a well thought-out strategy on the part of Motorola," said Indian Cellular Association President, Pankaj Mohindroo .
"They have started working very seriously on the Indian market in the past four to five months," he said.
Mohindroo said he expects both Motorola and Nokia to use their manufacturing base in India to cater to worldwide demand in future.
"By 2010, it's our vision that India should account for at least 10 per cent of the mobile phones produced in the world," he said.
"In this context, Motorola's announcement is extremely welcome."
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