According to the ministry of human resource development (MHRD), the next tender for 55 lakh units of Aakash 2 which is to be floated in January 2013 will bring down the price to less than $30.
Though we have not floated the tender, the RFP documents are ready. The next tender may bring down the price in the $20 range. The manufacturing price is $35 at present and we expect it to be reduced for the 5.5 million units to begin with, said an MHRD official.
The Aakash 2 costs R2,263. This is the price at which London-based DataWind supplies it to the government and the latter is offering it to students at a subsidised price of R1,131. The company will supply 100,000 units to the government by December this year after which the new tender for 55 lakh units would be floated.
Though both Aakash and its improved version Aakash 2 have been developed by DataWind, the new tender will ask for more than five suppliers to supply the tablets because of the huge demand and the government wants competition in the market to further reduce the price.
The distribution among selected companies will not be equal and the one which bids the lowest will get the maximum chunk. It depends on their production capacity. We will ask for value addition in terms of designs and patents and prefer those firms which want to set shop in India, the official added.
The plan is in line with the governments proposal to give preference to domestically manufactured electronic products in government procurement for its own use and the National Policy on Electronics, which seeks to promote the Electronic Manufacturing Services (EMS) segment by promoting progressive higher value addition in manufacturing and product development.
According to Suneet Singh Tuli, CEO of DataWind: The issue is not of profitability alone. For us, the margins are less than 10%, but the demand is high and this will create pressure to reduce prices.
In fact, to achieve its target of reaching out to 22 crore students in five years, the ministry has now roped in seven Indian Institutes of Technology (IITs) to develop the educational ecosystem for the new lot of Aakash, including the IITs in Madras and Kanpur.
These IITs, with their dedicated Aakash Application Labs, have been working on the development phase of the computer for the last 3-4 months. The testing of the tablet will be done by the Centre for Development of Advanced Computing (C-DAC).
While Aakash was procured and tested by IIT Jodhpur, applications for Aakash 2 have been developed by IIT Bombay and the tablet has been tested by C-DAC.