Till a few years ago India is known for its design skills in both SoC Design and EDA tool development. Due to high skilled talent pool lot of MNCs have come and set up their captive centres. Also several Indian companies have come in design services area and they are very much successful. Perhaps India hosts the few biggest design services company in terms of revenue as well as number of engineers.
In last few years things are moving in another direction. Slowly product companies are coming in India and becoming successful. Cosmic is a great example which got acquired by Cadence. Recently another Indian product company Ineda has raised significant fund.
But making a product company out of India has its own advantages and disadvantages. The biggest advantage is availability of high skilled engineers at very competitive cost. For areas like IP and EDA tool, where engineering salary constitutes a big portion of product development cost this is an advantage. For fabless SoC company the advantage is not that high becasue manufacturing cost is also a big component and being in India has no special benefit for that
But the biggest disadvantage lies is the absence of customers in India. As there are virtually very few fabless SoC companies in India, any Indian IP or EDA company needs to depend on foreign customers. This is a significant challenge for a start-up. People may argue that start-up can have sales office or sales representative in customer locations like US, Europe or Taiwan, but that logic holds true for a grown up company. In any strat-up at early days selling is typically done by promoters. One of the reason off course non availability of fund to afford sales office, but more important reason is at a very early stage a promoter can only articulate the uniqueness of his product and can convince customer to choose his product over same from well established companies. And engaging with potential customer is a big need for any product particularly at high tech segment. It is very difficult to build a successful product without a customer's involvement in high tech industry