Cisco bets a billion dollars on India

Cisco this week said it will invest US$1.1 billion in India over the next several years, with new projects in R&D, venture capital, equipment financing, and customer support targeted for the world's second-largest country.

Cisco CEO John Chambers said the move is to address the rapidly growing economy and IT needs of India. "India has rapidly risen to become a major force in the global economy," he said in a statement. "As Indian companies strive to be globally competitive, they have realized the importance of investing in information technology and networking."

According to the World Bank, India's IT sector accounted for approximately 4 percent of its GDP between 2003 and 2004, with almost a million employed in the sector. More than 100 multinational corporations have set up R&D centers in India.

Cisco will invest $750 million for R&D activities, including training and development of engineering staff, as well as partnerships with local companies in R&D. (This equals about a quarter of Cisco's estimated total R&D budget of $3 billion in 2004). Cisco's financing arm, Cisco Systems Capital, will invest $150 million to support product leasing and financing for customers in India. Meanwhile, $100 million will be invested in venture capital for India-based start-ups and investments in customer support. Another $100 million will go to support investments, including channel partner and technical services areas.

Chambers made the announcement during a three-day visit to India, where he met with the country's prime minister and minister of education.

Cisco is not new to India, as it set up its first operations there in 1995. It employs 1,400 people throughout the company.

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