“When deregulation takes place, generally an influx of capital follows. Every government needs to do what’s important to them from a sovereign perspective but overregulation never works because people are not incentivised to invest,” Neri told ET in an exclusive interview in Barcelona.
Houston-based HPE has been part of the US-India commercial engagements, pushing to get the right balance in regulation. The global edge-to-cloud company works in servers, storage, networking, containerisation software, consulting and support. The three key domains that it focuses on are networking, hybrid cloud and artificial intelligence.
The comments come at a time when, as ET reported on November 12, the Indian government is considering asking all electronics companies to reduce overall imports of laptops, tablets, all-in-one personal computers, ultra-small form factor computers and servers by 5% of their total import bill.
In addition, the companies could be asked to increase the domestic value addition on products being assembled or manufactured in India.
The government first imposed import restrictions on laptops, tablets, all-in-one personal computers, ultra-small form factor computers and servers on August 3, 2023.
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“My view is that with the amazing human capital that India has – natural resources, the broad geography, the location of the geography itself – as a country, I think deregulation is important because it would incentivise companies and I have been part of the US India commercial engagements under the secretary of commerce. We have been pushing to get the right balance,” Neri said.The 5% cut of the total import quota to be taken by companies will be based on the data from the Directorate General of Commercial Intelligence and Statistics and will be implemented from April 1, 2025, people familiar with the matter had told ET.
In 2023-24, imports of these products stood at $8.4 billion against the authorisation of around $9.5 billion. As per officials, the import monitoring system showed that most of the goods came from mainland China and the rest from Hong Kong, Southeast Asia and the US.
“Even today when you do local manufacturing, you may need to import certain parts, and that process is costly and long. You must go through import-export (processes), paperwork and clear customs. When you have friction in the process, it is not good. Forget the money, friction alone is not good,” said Neri.
“The manufacturing ecosystem includes multiple steps. Some parts and aspects need to be imported to manufacture in India because you cannot manufacture 100% of everything. You must think about how to incentivise people to do that,” he said.
Neri further said, “Our government team is working with Indian policy makers to figure out what the right thinking is. We can’t write the policy, but we can understand the thinking.”
HPE is the first company to start production of servers in India, ET had reported on August 2, citing a government official.
The company has committed to achieving $1 billion worth of local manufacturing in five years. It shipped its first batch of 1,000 made-in-India data servers beginning March. In 2019, it announced an investment of $500 million over five years in India to expand operations and the local team, with a workforce of 14,000, accounting for 23% of the company’s global headcount.
“India is the fastest growing economy on the planet as far as I can see. The last decade was about China, today India is the fastest economy… For us, as a market, it is one of the largest markets we participate in, we have big aspirations to grow faster in India,” Neri said.
“We’re a global company and also need to manufacture close to customers. There are different levels of manufacturing from level one to level ten, and the entire ecosystem needs to move with it. If I have just an assembly line in a country but all the other suppliers are not close by, it doesn’t do any good,” he said.
(The reporter is in Barcelona at the invitation of HPE to cover HPE Discover Barcelona 2024)
