Nokia, the world's largest handset maker, is investing up to $150m (£78m) over the next four years to establish a manufacturing facility in India.
Upon completion, the plant is expected to employ about 2,000 people and be used to manufacture the full range of Nokia's handsets for both GSM and CDMA (Code Division Multiple Access) technologies, the company said. The handsets could retail both in India and in neighbouring countries, it said.
Nokia is still evaluating the investment to determine, among other things, the plant's size. The company expects to finalise its plans during the first quarter of 2005. The first handsets from the Indian facility should be rolled out by the end of 2005 or early in 2006, the company said.
Nokia's share of the handset market eroded over the past year as rivals such as Sony Ericsson Mobile Communications and Motorola worked to improve their handsets and lower prices. Nokia is working aggressively to counter the increased competition and pinned much of its hopes for growth on opportunities in emerging markets such as India, Brazil and Russia.
The company currently invests in India. In April it announced work on a CDMA research and development facility in Mumbai. And Nokia is already negotiating with component suppliers for its new Indian facility, as well as talking to regional operators about marketing and distributing the handsets.
The anticipated boom in Indian mobile telephony attracted other companies to set up manufacturing operations in the country. Ericsson in Stockholm, for example, said it plans to make radio base stations in India.
India recorded about 41 million mobile phone subscribers in August this year, according to the Telecom Regulatory Authority of India in Delhi. The figure could reach 100 million by 2006 and 200 million by 2008, Carl-Henric Svanberg, Ericsson's chief executive officer and president, said recently in Delhi.
The total number of mobile subscribers worldwide will hit two billion by the end of 2006, according to Nokia's forecasts. It predicts that India will make up almost 12% of that figure.
Separately this week, an executive at Microsoft said that the software maker is also setting up a research lab in Bangalore, India, that will focus on areas including computing technologies for emerging markets.
India is seen as offering several advantages to large corporations, in terms of sales opportunities in the region and relatively low labour costs.
Laura Rohde and John Ribeiro write for IDG News Service