Cisco to invest $1.7 billion in India this year; to partner Centre’s digital drive

Bengaluru: Nearly three months after Cisco Chairman & CEO John Chambers said he will "bet big on India", the world's biggest computer networking company detailed plans to invest around $1.7 billion in a year, becoming the first multinational to make such a commitment in the country since the Narendra Modi government took over.

After a spate of exits of top offi cials and concerns over business growth in the country , Cisco is back on its feet with billions of dollars up its sleeves as it looks to partner India on the government's digital initiative.

"Cisco is investing $1.7 billion this year into the India operations," Cisco's India president Dinesh Malkani told ET. "The investment includes a $40-million innovation fund and investments into R&D."

"I think Modi in India is going to turn around that country," Chambers had said during an earnings call in August. "You can see the en thusiasm both citizens and businesses there are betting on a single emerging market. I would bet on India right now in a big way." Cisco India lost at least four key people in the past year, including India head Jeff White. In the quarter ended October 26, 2013, Cisco's India revenue declined 18%. With the new Modi government in place, Cisco is placing a fresh bet on India.

With a fresh annual investment of $1.7 billion in India, Cisco is preparing to bid for large government contracts for smart cities and other Digital India projects. Chambers sees huge opportunity in India. During a speech in August, he said he wants Cisco India's contribution to the parent company rise from less than 2% now to at least 5%. As the US network equipment-maker faces constant dip in its China business, Cisco sees India as a big opportunity for growth. In the quarter ended July 26, Cisco India's revenue grew 18% while China revenue declined 26%. The slide in China revenue continued even during the subsequent quarter when the company saw a dip of 33% in China business. India was still growing at 6%.

"Cisco has been a market leader in a lot of areas. India market is important for them from a smart city perspective. They are doing a lot of work in that area. Even in the data centre space they are doing very well. With smart city being a big thing in India, Cisco will double down in the long term," said Karthik Ananth, director at marketing research firm Zinnov. Cisco is now approaching the new government opportunity by carving out a new division called the Growth Vertical, which will focus on areas such as eHealthcare, eEducation, smart cities and national broadband project.

The growing Internet penetration and exponential growth of Internetbased companies, such as Flipkart, Ola, Zomato in the country, is creating newer opportunities for Cisco. "Every time a new user gets added to the network, he's an opportunity for education, for banking, for ecommerce. We've been working with businesses to provide the network. We also want to partner with the government for the national broadband project, to make sure the network is available to every village in the country," Malkani said.

"We've got some of our best people to be a part of this new division as it requires a lot of work," Malkani said. "For such projects, the products need to be more rugged and localised. The team is working on making sure we get every bit of that right."

Some of the key people who are a part of the division include Purushottam Kaushik, who'll be heading the growth vertical and has previously been working on projects in telecom, India digitisation, Internet of Everything, physical safety, energy, manufacturing and transportation. Vishal Saxena, who has been in the company for last eight years, working on service provider and defence business, is now heading India digitisation and smart cities part of the growth vertical. Rupinder Singh, who has been technical leader for the public sector, enterprise and service provider business, will be playing the engineering director for India digitisation, Internet of Everything, physical safety and surveillance.

Cisco, which employs 11,300 people in India, has moved about 15-20% of its India workforce to the newlyformed division. Cisco has already won some large government projects in these areas. The company is consulting the government on building four out of the five smart cities in the Delhi Mumbai Industrial Corridor. "We built the entire blueprint for four of the five cities on DMIC.

Now we are moving into the next phase where we are going into a lot more detail about the deployment and the project plan," Malkani said.The four cities include Dholera Special Investment Region in Gujarat, Shendra Bidkin Mega Industrial Park in Maharashtra, Manesar Bawal Investment Region in Haryana and Khushkhera Bhiwadi Neemrana Investment Region in Rajasthan.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.