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Can India Leapfrog into RFID?

RFID offers tremendous potential for catalyzing India’s growth and development. With the semiconductor industry and mobile communication technology maturing, radio frequency identification (RFID) is expected to enter the market in a big way.

According to S. Gopalakrishnan, president and chief operating officer, Infosys Technologies Ltd., India stands at the threshold of a great revolution. “Not only does RFID afford the opportunity to build on our proven software services strengths, we now also have the opportunity to leverage our high level of engineering skills and lower cost manufacturing capabilities to be at the forefront of a virtually new segment of IT (Information Technology) hardware. India thus has all the pieces necessary to offer a complete RFID ecosystem,” he says.

The RFID market scenario in India is currently at embryonic stage. In April 2005, the RFID Association of India was founded to promote the adoption and awareness of RFID technology, standards and applications across industry, government and academia in India. Industry analysts expect the RFID market will grow to $22 million by next year.

As RFID grows at a rapid pace across the world, Indian software firms are targeting the global market in retail, logistics and manufacturing. Major players like Wipro, Infosys and Patni Computers had already started research and development pilot projects to develop solutions for vehicle tracking, animal tracking, retail automation and the like.

There is a big opportunity in the development and implementation of RFID-based software solutions for the Indian software industry, according to Ravi
Mathur, chief executive officer, EPC Global India. “The greatest opportunity will be the middleware segment, where IT companies can develop software to pick up RFID data, and also work on network security,” adds Mathur. EPC Global India is part of a global industry government initiative that is leading the development of standards for Electronic Product Code (EPC) to support the use of RFID.

The most promising vertical market for RFID in India will be the retail segment, which is projected to grow at 36 percent by 2008. Other promising verticals are pharmaceutical, logistics and security. These markets represent an emerging battlefield for IT firms and RFID tag and reader manufacturers.

Manufacturing leapfrog

Discussing the use of RFID in various verticals, Gopalakrishnan said that the manufacturing sector has the potential to leapfrog to the next level of efficiency in managing supply chains and to start competing more effectively with global players such as China. In the pharmaceutical sector, RFID can improve raw material tracking for the manufacturing audit trail right from the factory floor, to avoid counterfeiting of drugs and speed up clinical trials.

Gemini Traze RFID Pvt. Ltd is establishing India’s first RFID tag manufacturing facility at the Seriperumbudur electronic park in Chennai. According to Pradhyumna T. Venkat, business head, the Gemini Traze RFID facility is a first among the SAARC (South Asian Association for Regional Cooperation) nations. It plans to roll out 45 million ultra-high frequency (UHF) tags annually, which can be scaled up to 100 million, he said. He is positive that this would slash the cost of RFID tags by a whopping 60 percent.

Indian companies are currently actively evaluating the deployment of RFID, with numerous pilots under way. Pilot projects of Indian companies—such as Pantaloon, Madura Garments and Ashok Leyland are almost in the final stage. One example is the pilot at Pantaloon’s Tarapur warehouse with 1,000 tags.

However, the transformative potential of RFID cannot be taken for granted, as there are many challenges en route. The cost of investment in RFID deployment—which ranges from between $1 million and $20 million for basic and high-end RFID tagging—will be the major deterrent. Another stumbling block in adoption of the RFID in India will be the high price of RFID tags and readers, which can range from $200 to several thousand dollars. Additional hurdles included breach of privacy issues and low RFID awareness.

Indian industrial proponents, however, are confident that these hurdles can be overcome. Says Nicholas Fergusson, Senior Technical Director, EPCglobal Inc, “India is emerging as a strong global economy with a wide industrial base. It also possesses globally recognized and well respected IT skills. These two factors offer exciting possibilities for deployment of RFID technology in India and across the world leveraging its IT skills.”

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