Investor’s tip to Indian manufacturers: Adopt tech and become ‘Silicon Valley’ for global funds

Given the government’s generous incentives, the Indian manufacturing sector should adopt technology to become a “Silicon Valley” that attracts global sovereign funds, said Bengaluru-based industrialist-turned-investor Ankit Kedia.

“Eventually, we should build Indian manufacturing startups that expand abroad as part of our future plans, as we want to make products for the world with a home-grown Silicon Valley-type ecosystem,” Kedia said in an interview to PTI at the Super AI conference and exhibition held June 18-19 here.

However, technology must be made affordable for these cash-strapped manufacturers operating in lower-cost environments in tier 2 and tier 3 cities, he said.

Bengaluru, already recognised as a technology hub and often called India’s Silicon Valley, should now focus on manufacturing, especially by leveraging advanced technologies such as artificial intelligence, he suggested.

Kedia, who is currently working on a Rs 400-crore Fund-2 under his five-year-old Capital-A, shared his vision for the Indian manufacturing sector over the next 15 years, aiming for a strong foundation across the country, starting with low-cost factories in tier 2 and tier 3 cities.

With two decades of experience in various industries and five years of running Capital-A Fund-1, Kedia is focused on technologies for the manufacturing sector, which he wants to combine with his long-term investment horizon of 15 to 20 years.

Kedia has explored opportunities for the use of AI in manufacturing at the Super AI show, stating that he is returning home to raise Rs 400 crore for Fund-2, which will be strategically invested in factories in tier 2 and tier 3 cities such as Amritsar, Pune, Ahmedabad. “We want hardware producers in these cities to form the foundation of our future manufacturing ecosystem and to share prosperity across the country,” he said.

“India’s large consumer market, along with the government’s Production Linked Incentive (PLI) schemes, provides further confidence to investors to support small and medium-sized software or hardware manufacturers, who will have a low-cost advantage when competing globally,” he emphasized.

Kedia also sees international sovereign funds moving to India for better returns on investment, especially as they face pressure from global uncertainties.

Capital-A Fund-1 has reported an Internal Rate of Return (IRR) of 28 per cent and is being tracked at 1.8X, Kedia said.

“Such fund returns are becoming more and more attractive to sovereign funds in Europe and the United States,” said the fund manager, who invested Rs 120 crore under Fund-1 across 25 investments five years ago.

“The strong domestic market, the stability of the Indian ecosystem, and the potential of leveraging an increasing number of free trade agreements (FTAs) between India and international markets are all plus points for our manufacturing sector,” he underscored.

Harshul Arora, founder and CEO of Noida-based Macgence, noted that more and more enterprises are shifting to AI-automation to be more cost-effective and capture a bigger share of the market through efficient production.

“Small manufacturers in tier 2 and tier 3 city regions are able to use AI to communicate with their clients – a real time translation is offered to these small manufacturers to communicate in any language with clients.

“This will increase their communication skills and reach to global businesses as well as a large audience,” said the 24-year-old who started with a language solutions company and now runs training data solutions for AI companies globally.

Over 7,000 participants from more than 100 countries attended the Singapore Super AI.