Dell has issued a denial and the prime minister’s office has no comment to make on it. But the news a couple of days ago of a possible Dell pullout of China and entry into India in a big way has raised a few questions.

Do we have it in us to become a hardware powerhouse? Can India’s IT hardware graduate from being a screwdriver industry? Will Made-in-India remain just a sticker on the PC carton? Or can PCs made here boast of ‘India Inside’, a la Intel?

Everyone says the country has the potential to rival China and Taiwan. The prime minister thinks so and has asked the planning commission to see how the hardware industry in India can mature. The implied message is that we have the potential and all we need is the will and a plan of action.

According to Vinnie Mehta, president of MAIT, all leading global computer brands --Dell, HP, Acer, Lenovo, et al – are already making PCs here. Then there are the homegrown Wipro and HCL.

If that is a reassurance, here is the reality check. The presence of the big names still does not make us China. All PC production in India feeds on parts that come mostly from Taiwan or China. And all of them cater to the domestic demand. In other words, the rest of the world still doesn’t trust India-made PCs.

Let’s look at the Indian market. This year the country will absorb between 7.5 million and 8 million PCs, of them up to 2.5 million will be notebooks, most of which will be imported.

Analysts say India’s installed capacity is between 7 million and 8 million PCs, nearly all of which are desktops. Some like HP, HCL and Dell have just a bit of screwdriver- assembly of some notebooks in India. But one conclusion from these data is that even the installed capacity is not fully utilised.

Now consider the Chinese capability and market. Mehta says China’s market size tops 50 million PCs. Its domestic demand is robust, so are its exports. In terms of sheer size of the hardware industry, China is almost seven times as big as India. We have a lot of catching up to do.

This, when there is a general consensus that India is better than China in productivity, quality and cost.

Sunil Dutt, vice-president of HP India, sees India as a big market, which will only grow. Saying that doesn’t need much foresight and doesn’t indicate if India can.

Sandeep Aurora, South Asia sales and marketing director of Intel, believes India can.

He says: “Look at the automobile sector. As in that sector, we need to put some goals and policies in place for hardware. There is no dearth of manpower. We can do it in a systematic way, taking small steps like China and Taiwan did. If we start promoting domestic players and concentrate on them, people outside can understand our potential. Then they will come forward (to buy Indian).’’

The biggest opportunity lies in the ‘Made in India’ approach. The biggest problem also lies there. India simply does not have a component manufacturing base. That’s what stops an explosion from happening in the PC market, according to Mehta of MAIT. Assemblers – the manufacturers here are nothing but that -- have to import all components. “This is where markets like China and Taiwan are ahead of us,’’ rues Mehta.

But some change is taking place. There is growing awareness that Chinese or Taiwanese products do not suit Indian conditions; nor can they quickly adapt to our market dynamics and demand – one key reason why big global names are increasing their investments here.

A beginning has been made in exports. Negligible as they are now, exports may multiply. But that, says Vinay Shetty, country product manager for CPN/LCD at ASUS India, hinges on how the outsourcing edge is used. “If everything goes well, in two to three years I expect outsourcing to start.”

The centre has set up a task force headed by HCL Infosystems chief executive officer Ajai Chowdhary, for electronics and IT. It has a sub-committee for electronic system design & manufacturing ecosystem headed by Indian Semiconductor Association chairman B V Naidu.

An early report from it puts India’s present electronics demand at $45 billion, growing to $125 billion by 2014 and $400 billion by 2020. Of the values, IT systems and hardware will account for 14 per cent. The report, however, makes it clear that the targets are achievable only if the government ‘incentivises’ the sector.

India’s dependence on imports is 85 per cent of the home demand, underlining the urgency to raise domestic output. If this is not reduced, at a market demand of $400 billion, “the trade imbalance will be $ 300 billion,” according to Naidu.

This makes higher domestic manufacture imperative. “This is the decade of electronics design and manufacture. We need to be aggressive and nurture the domestic market,’’ says Naidu.

George Paul, executive vice-president of HCL Infosystems, sees the electronics industry in India on the threshold of a gigantic opportunity. Allowing access to funds for R&D, innovation and Brand India -- ‘Made in India’ designs, solutions and devices, local value - addition being an integral part of it --- would help, he says.

The lesson from all this is: India can. Only if….

(With inputs from N Vasudevan, S Shyamala & G Balachander/Bangalore & Chennai)