India aspires to be hardware IP hub

India aspires to be hardware IP hub
By K.C. Krishnadas, EE Times
January 14, 2003 (1:32 p.m. EST)
URL: http://www.eetimes.com/story/OEG20030114S0024

BANGALORE, India -- India has the potential to be the intellectual property (IP) development capital of the world, speakers at the third annual Electronic Design Forum held here recently, said. This would take it more than a notch above its current status of being a leading provider application software services to global firms.

The topic at this year's meet, sponsored by Cadence Design Systems (India) was 'Indian Electronics Design Industry: The Road Ahead'.

Development of IP is not a well-accepted business model for information technology companies in the United States as it is not scalable to the volumes needed for business there, but it can prove to be a good business for Indian firms, said Sridhar Mitta, one of India's best known research and design executives and a former head of Wipro's engineering labs. Mitta currently heads the Bangalore-based venture fund and incubation firm, e4e Labs Private Ltd.

Two other trends -- those of grow ing design costs and the componentization of systems -- aid India's efforts in developing IP, he said. This needs to be supplemented by building of the India brand for IP development, a position that India's software outsourcing business now enjoys.

"There is immense scope now for Indian firms to put software on silicon. India is not a cheap source of labor but a cost-effective one," said S. Sridhar, chief executive officer of ControlNet India Private Ltd., a chip design and product company based in Goa in western India, in a statement.

He said there is the need for firms here to focus on creating IP as a service differentiator. "India can be the IP capital of the world, but only through partnerships. Companies here must learn as to how they can interface their IPs," he said.

While the provision of design services is a short-term business, this must be capitalized on for the longer term, Sridhar said. He added that in contrast to an earlier time when companies thought it necessary to have their own fabs, soon companies would only have their product ideas and not have any designers. Sridhar said that design would largely be outsourced in the future and that India could occupy that space. This is where developing IP would come into play.

Cisco Systems has a product line that fetches it $1.5 billion annually with this entirely being done, managed and enhanced from India. This is an instance of the scope for IP development in India, but there is no large scale IP development being done by Indian firms, said S. Janakiraman, president of MindTree Consulting's technology practice, a Bangalore-based startup.

Sandeep Singhal, vice president of Indian-U.S. cross-border venture fund, Westbridge Capital Partners, Mumbai, said development of IP in India could bring down the cost of innovation. New products can also target smaller niche markets if innovating a mass-market product is beyond the reach of Indian firms. "The Indian market is beginning to grow and there is now scope for low-cost, innovative p roducts. It will eventually grow to provide scope for higher-cost products too," Singhal said.

On India as a source of IP to the world, he said funding is not a constraint for those interested in developing IP. Westbridge is funding some firms doing just this and in the next three to five years, there will be a lot of IP development coming out from India, he predicted.

Rahul Arya, senior manager at Cadence India said companies such as his own were faced with the challenge of keeping EDA tool costs low in India. "This is a challenge for us as it is a demand that companies here keep making. There is more design realization happening in India now unlike earlier, so it's a challenge we have to address," he said.