05/25/2006

By RAJESH MAHAPTRA  / Associated Press

Dell Inc. said Thursday its plans to build a manufacturing plant in India have made progress and that it would be ready by the end of this year, helping the personal computer maker beef up its presence in one of the world's fastest-growing markets.

The company is expected to make an announcement about the location of the plant in India over the next few weeks, said Paul-Henri Ferrand, Dell's general manager for South Asia.

"The facility will be up and running by end of the year," Ferrand said.

The plant, he said, will enable "substantial" cost cuts and help the company compete in the Indian market, where it trails rival Hewlett Packard Co., Indian computer maker HCL Technologies Ltd. and Lenovo of China.

Dell didn't give details about the capacity of the plant, or how it could come into operation in such short time. But Judy Low, a company spokeswoman, said Dell started production in China in just six months from announcing to set up a plant there.

She also said Dell had done well in selling its products here. Its revenues from India increased to $80 million in the quarter ending April, up 40 percent from the same period a year ago.

Still, the Round Rock, Texas-based company has a market share of just 5 percent in India.

Dell currently lags largely because of taxes that result in higher prices for its products. The Indian government imposes higher import taxes on fully assembled computers than computer parts, and Dell currently ships complete computers to India.

A plant in India would help the company avoid some taxes, improve delivery time and cut logistics and transportation costs.

Computer sales in India are expected to increase to 10 million annually over the next three to five years.