Philips drops Indian venture

Philips Electronics' consumer business has scrapped plans to set up a telecoms equipment plant in India, following its divorce from Lucent Technologies.

Since Philips ended its joint venture with Lucent in September, Philips Consumer Communications (PCC) has become a wholly-owned subsidiary of the Dutch giant.

Sanjay Nischal, head of PCC in India, said that PCC decided last week to ditch the factory project: 'We re-evaluated our business plan for India after the separation.' he said.

He added: 'We found that it would be difficult for us to compete with the local players on price.

'There was no way we were able to manufacture our products at $12.50 per unit. So we decided to discontinue the project for the time being.'

Nischal maintained that Philips would continue to target Indian users with its communications products.

'PCC in India will be launching at least three new GSM products in the next calendar year. This will range from low-priced models to premium ranges such as Genie,' Nischal said.

'At present, PCC has a 30 per cent stake in the organised handset market in India and we propose to maintain the share with new launches,' he went on.

To support the proposed direction, PCC is set to reorganise its pager business, which the company conceded has failed to meet expectations.

'The pager business has not really picked up as expected and we need to restructure our focus on the product. We are working onthe statistics and watching the development in the telecoms sector,' admitted Nischal.