Lava International has received a three-year, multi-crore order from US conglomerate General Electric to manufacture hand-held devices meant specifically for medical use, as the homegrown handset maker makes a concerted push into contract manufacturing even as it maintains a foothold in the feature phones space.
“Not only are such contracts beneficial to our company, they also help build an ecosystem of R&D and manufacturing in India,” Sunil Raina, president of Lava International, told ET.
NYSE-listed GE also confirmed the development to ET. Lava and GE did not, however, comment on the deal value.
The smartphone-like devices — meant for GE’s healthcare division and to be shipped to several countries — have a portable ultrasound system that helps medical teams to diagnose and provide timely treatment decisions in remote locations or in case of emergencies.
Lava is expected to enhance the features and performance of the device and provide regular software support and upgrades, people familiar with the deal said. People tracking the sector put the deal value at Rs. 100-200 crore annually.
“This will certainly help Lava remain relevant and possibly carve a niche through its device play in much larger enterprise space,” said Navkendar Singh, research director, International Data Corporation (IDC) India. “It makes perfect sense for Indian brands to find niches for growth by playing to their strengths in distribution and manufacturing.”
This is the second deal for Lava amid the continuing Sino-US trade war. ET reported earlier that Lava, along with mobile phone maker Micromax, received a Rs 2,500 crore order to manufacture smartphones for American carriers AT&T, Sprint and T-Mobile.
The GE order also ties in with the government’s efforts to make India a global hub for manufacturing in areas such as medical electronics and defence electronics, besides scaling up local production of handsets and manufacturing capacity of automobile electronics. India last week allowed 100% foreign direct investment in contract manufacturing through the automatic route.
“This ecosystem shift into India will lead to a major economic advantage for our country, and a partnership with global enterprises, like GE, is an important milestone in our journey of taking the Indian design and manufacturing prowess to the world,” said Raina.
The latest manufacturing contract also comes as a relief for the handset maker whose smartphone assembly plants have been underutilised. The combined share of Indian players has slumped to some 3% from a cumulative 40% at the peak in mid-2015, as the market got swamped by Chinese players.