"India is a vitally important market for Motorola and as a strategic manufacturing hub offers compelling value proposition and strong cost efficiencies," Ron Garriques, executive vice-president at Motorola Inc, said in a statement.
Once its unit is up and running, Motorola would join companies like LG, Samsung, Elcoteq, XL Telecom and Nokia that have set up production facilities in the country.
All told, some 20 million handsets are expected to be produced in India this year, a figure that could go up by 50 per cent in 2007.
Motorola today signed a memorandum of understanding with the Tamil Nadu government for setting up its facility on a 300-acre Sriperumbudur Hi-Tech Special Economic Zone, where Flextronics and Foxcon will also have their facilities. Motorola will be allotted about 70 acres of land in this SEZ.
The company plans to make an initial investment of $30 million, which it expects to upscale to $100 million in the next one year. In the first phase, it will set up a facility over 2.5 lakh sq ft, which will manufacture mobile handsets, including sub-$30 mobile phones, and support production and assembly of network base stations for products across Motorola's Network and Enterprise portfolio. It will also manufacture set-top boxes.
Addressing a press conference, Stu Reed, executive vice-president (integrated supply chain), Motorola Inc, said the manufacture of products like sub-$30 mobile handsets would go well with the government's plan to offer rural connectivity.
He added that the plant would initially focus on serving the domestic market and later look at exporting products to neighbouring countries, West Asia and Africa.
The manufacturing facility is expected to be operational in early 2007 and will have a capacity to manufacture one million handsets per month. It is likely to employ about 3,000 people in the initial phase and the total employment is expected to go up to 7,000 in the second phase.
In addition to the company's investment, it will facilitate its supplier to move into the park. Motorola's manufacturing initiative will supplement its six R&D centres in India.