NETGEAR to start its production within two years in India

California-based $1.30 billion NASDAQ-listed global networking company NETGEAR has direct presence in about 50 countries. But its products are available in over 80 countries as it sells its products through distributors in 30 odd countries.

NETGEAR has over 1,000 employees around the world. Most of them are engineers developing products. About 50% of them are into R&D activities scattered around six R&D centres such as Bengaluru, San Jose (Headquarters), San Diego, Vancouver (Canada), Taipei and Nanjing (China).

The company has been in India for over 12 years. NETGEAR Chairman and CEO Patrick Lo, who was in Bengaluru recently, interacted with  Deccan Herald’s Umesh M Avvannavar on the company’s expansion plans and opportunities in India. Excerpts from the interview:

Tells us about your India experience?

India has always been what we call a land of opportunities. If you look at India, it has one of the most educated populations in the world. India has the fastest growing population in the world, and it has the fastest growing GDP in the world as well. There are lots of opportunities in India and challenges as well. I think there’s a lot of regulation, a lot of rules and furthermore I think in India, the market is relatively fragmented because of the rules and the tax system, which changes from one state to another.

It’s not like a homogeneous market like China or US, so it has its challenges. But to us it is the fastest growing lucrative market. I think the beauty of India is that it is one of the most advanced in terms of its awareness to all the new things about internet accessibility and internet of things. I think technology is really well accepted and understood in India.

How many employees are there in India?

Right now, we have about 60-70 people in India,  and most of them are operating from Bengaluru. We have one more office in Delhi, and we also have people working from home in various cities like Mumbai, Kolkata, Pune, Chennai, Kochi, Hyderabad, and Ahmedabad, among others.

How many products have been launched so far in India? Are you launching any new products  here?

We launch about 20 products every quarter. So, I would say out of 20, at least half of them will be launched in India. So we will launch anywhere between 30-40 new products in India this year. On an average we launch a product every other week.

Do you have any plans of setting up a manufacturing unit in India? 

Yes. We do believe that within the next two years, we will start production of NETGEAR products in India. We are keen on Chennai as our manufacturing partner Foxconn has good facilities in Chennai with whom we are working very closely.

What is your distribution strategy in India?

We have two major distributors — Rashi Peripherals and Redington India Limited. Rashi is based out of Mumbai and Redington is based out of Chennai. They have coverage across all states and many cities.

Have you been using eCommerce platform for selling your products in India?

We have our presence in eCommerce for the last two years and the business is accelerating from last year on Flipkart, Snapdeal, Amazon and Paytm. It is very important channel for us around the world.

What are your expectations from the Indian government? 

I feel that the best thing Prime Minister Narendra Modi can do is to get the goods and services tax (GST) implemented. That would be the number one thing that could solve a lot of problems. It would help ease logistic problems, the price variants and make commerce so much easier.

How do you see the company’s  growth  in 2016 when compared with 2015?

Actually 2016 is a transition year. We do not expect a lot of growth in top line in this year. We shrink some of the old product lines such as cable, DSL gateway that we sell to the service providers that we are not doing anymore. We decided to go away from that business. On the other hand in 2016, we are primarily developing a new line of products like IoT (Internet of things). We will be replacing those old lower margin cable and DSL gateway products with new higher margin IoT products. Thus 2016 is the year of transition of products. 

The year 2017 is where we believe the growth would come from. But of course, it varies from region to region. Traditionally in Asia we do not sell much to service providers, because of  low margin and old technology products. Also,  these are pretty much a legacy business. Among all the regions, Asia pacific continues to witness a double digit growth in 2016 as against North America and Europe.