Will Dell Have Its Indian Call Center In Omaha?

Dell Computer is opening up a factory in Chennai, India, to manufacture desktop PCs, and later notebooks as well. But the factory is not there to take advantage of cheap labor to make computers for the US market. India's market is poised for explosive growth, and the Chennai plant will be a foothold for Dell in the Indian subcontinent.

It wasn't too long ago that India was an afterthought for many people in the computer industry. For years, the country took a back seat to China. For good reason: China has quickly grown to become the world's second-largest PC market, after only the U.S., and it's likely to become No. 1 in the next few years. This year, Chinese are likely to buy 33.6 million desktops, notebooks, servers, and other computers, according to projections from market research group Gartner. For Indian computer buyers, the number is just 8.8 million.

But the market in China is slowing down just as India is accelerating. Both countries will enjoy growth between 16% and 18% this year, says Martin Gilliland, Asia-Pacific research director for Gartner. But next year India will move ahead, he says. While China's PC market will still enjoy respectable growth of 14%, India's computer sales will grow at a rate higher than 20%. And it won't be a one-year rise. Growth that fast will continue "to at least 2011," says Gilliland.

India has a rat's nest of import duty regulations that makes many finished goods like computers uncompetitive if not domestically made. Assembling the units in India saves about 10% in import duties, and will make Dell competitive there price-wise. The US government need to do more to get such restrictions lifted and allow US goods into India without tariffs.