Lenovo, the world’s largest producer of personal computers and laptops by sales, is the second-largest player in India. Shailendra Katyal, the prolific Managing Director (MD) of Lenovo India recently discussed the tech giant’s plans for the future in the techscape, the current market situation, and the ongoing challenges in India’s education sector, which are held back significantly owing to the under utilization of technological resources.
The company is now venturing into the server market for artificial intelligence (AI), with plans to begin manufacturing servers in India, at its Puducherry plant.
Shailendra Katyal provided a comprehensive understanding of the Company’s and Market’s state post the COVID-19 pandemic which sent shockwaves across every industry. While the pandemic caused market disruption—high demand paired with strained supply chains—the market has since recovered. Factors like the upcoming end of support for Windows 10 and the transition to Windows 11, along with AI advancements, are influencing demand, particularly in the enterprise segment.
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The insight was provided by the MD in an interview with Sonal Choudhary and Arup Roychoudhury of Deccan Herald.
The general notion put forth is that in India, factors like a stable government, clear policies, Production Linked Incentive (PLI) schemes, and a stable currency have contributed to a positive outlook, despite some ongoing supply chain challenges due to geopolitical issues. Lenovo remains optimistic about ending FY25 on a strong note, especially with rapid growth in its server business and new AI use cases.
Lenovo further mentioned its intent to expand its market share while maintaining that Lenovo has a strong market presence, though market share often fluctuates due to the cyclical nature of sales and large deals. The company has a strong foothold in private education and very large enterprises, both of which are key segments. However, Lenovo has faced challenges in the government sector, mainly due to procurement restrictions under the land border clause in India’s general financial rules. Lenovo has applied for approval under this clause and is also supporting the PLI scheme and Make in India initiatives, bringing high-end design jobs to the country. Lenovo remains the number two PC brand in India.
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The bone of contention raised by the MD is the lack of digitization of the educational sectors in India. India, being a country with a magnanimous population has an equally vast educational sector spread across regions, sectors, economic scales and communities. In light of this, Mr. Katyal stressed on the need to introduce digitization in the rural markets which would give an immense boost to the education sector, providing ease of access.
While private schools tend to assume that students have access to laptops or computers, rural and government schools face more pressing concerns like teacher shortages, with computer shortages being a secondary issue. Katyal emphasized the need for a collective effort across the ecosystem, including government involvement, to improve digital penetration in classrooms.
Lenovo has proposed the creation of a specific categorization for PCs and laptops used in education, with a recommendation to either exempt or reduce the current 18% GST rate on these devices to make them more affordable and help expand the market.
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In India’s largest cities, PC penetration is around 50-60%, similar to mature global markets. However, in tier 2 and tier 3 cities, penetration drops to around 20%, and in rural areas, it is often less than 5%. Lenovo is working to offer more affordable products to help increase penetration, though Katyal stressed that solving this problem will require a broader policy framework, ecosystem support, and government backing.
Lenovo currently meets 35% of its India demand from its Puducherry plant, with the remainder being fulfilled by its global network of eight manufacturing plants, including major facilities in China and Mexico. The Puducherry plant has significantly increased its production from under half a million units to 1.2 million units due to the Make in India initiative.
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It was stated by Katyal that the first half of FY25 has shown a reasonably strong performance. Lenovo has sufficient capacity at its Puducherry plant for server manufacturing, and its PC manufacturing ecosystem is well-established there. The company does not currently plan to establish a new factory but is instead partnering with original design manufacturers (ODMs) to expand production in other states. Lenovo is also shifting more shared services and design roles to India as part of its broader strategy to position the country as a key hub.
While Lenovo is currently known as a PC company, Katyal stated that within the next few years, the company will evolve into a comprehensive tech solutions provider, driven by investments to support growth in the Indian market.
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