Anthony Kurian

BANGALORE: Europe's top electronics manufacturing services firm, Elcoteq, will invest $50 million to $100 million in 2006 in its Indian handset unit to tap rising demand in a booming market, an official said on Monday.

The plant, on the outskirts of India's technology capital, Bangalore, will have capacity to make 10 million handsets when fully operational, Kaapo Liede, general manager for the Indian operations of Finland's Elcoteq, told reporters.

Demand for mobile phones and services is soaring in India, already the fastest-growing mobile market thanks to low phone penetration and the cheapest domestic call rates in the world.

Earlier this month, Nokia, the world's largest handset maker, said it would invest between $100 million and $150 million to set up a mobile phone plant in the southern Indian city of Madras.

Elcoteq's new unit, inaugurated by Indian Telecommunications Minister Dayanidhi Maran, will also make telecom gear for customers in the Asia-Pacific region, a company statement said.

Elcoteq, which gets a bulk of its business from making handsets and mobile phone network equipment for companies like Nokia, will employ about 1,000 workers in India.

On average. about 1.7 million new customers are entering India's 51.4-million-strong wireless sector each month. The furiously expanding market is widely expected to reach 80 million users by December.

"Most numbers in India are underestimates," said Hannu Keinanen, Elcoteq's president for the Asia-Pacific region. "The main reason we are here is that the market is here."

Keinanen estimated India would add 30 million new users in 2005, 60 million more in 2006 and 100 million new subscribers in 2007.

India's fast-maturing handset market holds great promise for players such as Sony Ericsson and LG Electronics Inc. since less than five in a 100 among its billion-plus people own a handset, compared with more than a quarter in China, the world's largest mobile market.

Fifth-ranked handset maker LG already makes handsets in India, Asia's fourth-largest economy, which is forecast to grow between 6-6.6 percent in the year to March 2006.