Arduino exploring India manufacturing to limit counterfeit sales

Arduino is considering manufacturing in India. The startup, best known for its open source microcontroller boards, hopes to restrict the rise of counterfeit boards and cater to the growing demand from India’s youth population.

The Italian firm is currently exploring partnerships with electronic manufacturing service (EMS) companies in the South Asian nation to begin its local production by as early as the first quarter of next year, CEO Fabio Violante told TechCrunch in a virtual interview. This marks a substantial shift from the company’s current practice of producing all its boards in Italy.

India is the largest market for Arduino IDE downloads, with 3.2 million. The country also has local branches of global Arduino distributors, such as DigiKey, Mouser Electronics and Avnet. However, India’s contribution to its customer base is currently less than 1%. Violante considers fake Arduino boards the key reason for this discrepancy.

“The strange situation for us in India is that even though the community is very large and the user base is very large for Arduino IDE, the quantity of original products we sell into the Indian market is very negligible because people cannot afford the original products especially due to hefty import duties for finished electronic products,” he said. “So people buy mainly alternative products, clones, and sometimes those knockoffs are from China.”

At present, the Arduino clones are available for less than half the price of the original boards. The latter also includes import duties. Therefore, by starting local manufacturing, Arduino would sell its boards in India at reduced prices — in line with those of its Chinese counterparts.

However, the problem of clone boards is not limited to India, Violante acknowledged, adding that the company currently sells one original board for every five to six clones in the market.

“It is a challenge, because we are open source and make money from selling the original hardware,” he noted. “So, the clones and counterfeits are a big chunk of the market.”

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Arduino is looking to address the problem of fake boards globally by making its hardware more sophisticated, which makes it more difficult to counterfeit.

“This is giving us a competitive edge by innovating continuously,” Violante said. “[The new boards] use more sophisticated microcontrollers, more sophisticated power section that are not easy to copy and paste.”

Last week, the executive visited New Delhi to attend an investor-focused event hosted by state-owned agency Invest India and met with government officials and legislators, including India’s minister of state for electronics and information technology, Rajeev Chandrasekhar.

India has been offering cashbacks and subsidies to global manufacturers to become a production hub, in a bid to compete with China. As a result, domestic electronics manufacturing in the country has increased by over 111% to $99 billion in the financial year 2022-23, up from $47 billion in 2017-18, per government data shared in the parliament last week. However, most of it results from the growth of local mobile phone manufacturing. The country is already the second-largest manufacturer of mobile phones, with over 99% of all its domestic mobile phone sales comprising India-manufactured units. The government wants to go beyond merely assembling mobile phones and grow local production even for components including displays and semiconductors.

Arduino is currently considering both large international EMS companies and smaller local players in India, which specialize in producing electronic boards or development boards, Violante told TechCrunch.

The executive indicated that the company might initially consider manufacturing its $27 Uno R4 WiFi in the country, which was launched globally earlier this year. It aims to appeal to the masses with specifications including a 32-bit Cortex M4 processor, 32KB RAM and 256KB flash storage. However, over time, it may start producing its enterprise-focussed Pro-series models, launched last year.

Violante said Arduino is also looking to connect with Indian institutes to create brand awareness among students and be a part of their local curriculum. Additionally, the partnerships with institutes will help the firm connect with companies that work with them. It already works with Tata Consultancy Services (TCS) in the U.S. and plans to expand that partnership in India. Moreover, Arduino’s initial start in the country, which projects to address the local demand specifically, may move toward exporting its locally manufactured boards to other countries over time as the startup — unlike many others — does not rely on China for manufacturing.