Look up India

History was created on January 25, 2002. And helping Dataquest

create that history were icons from the Indian IT industry, key government

officials, leading enterprise CIOs and representatives, top academicians and

media representatives. At this gala gathering of over 400, was thrashed out the

future course that the Indian IT industry should take. The best minds in the

country voiced their opinions on the best means to tide over the slowdown that

has just bottomed out.

The key agenda of the evening was the presentation of the IT Man

of the Year 2001 award to IT and Telecom Minister Pramod Mahajan and the

Lifetime Achievement Award to the late Dewang Mehta. However, prior to the

presentation ceremony, Jairam Ramesh, noted columnist and secretary of the

Congress Party’s Economic Advisory Committee, moderated a discussion by

stalwarts of the IT industry present at the on the occasion. Titled ‘Look up

India’, the discussion focussed on the key market and industry segments that

IT companies need to look toward in order to emerge stronger.

The industry pitched for the growth of the hardware sector,

saying that the time has come for India to provide the much-needed impetus for

its growth. The unanimous verdict was that if the hardware industry was ignored,

the country would not be able to sustain the buoyant growth it witnessed during

the nineties boom. The industry’s suggestions to the IT Minster ranged from

slashing import duty on components and acknowledging depreciation to 100% in IT

goods to facilitating the import of second hand computers.

As ideas flowed freely across the gathering of great minds,

nearly 25 senior members of the industry debated how India could replicate the

success of its software sector to emerge as a leader in the hardware segment as

well.

There were other issues too–from the need to promote IT usage

within the country to the issue of bringing down hardware prices and the lack of

meaningful content in regional languages. Issues such as the shortage of faculty

in the IITs and quality human resources to meet the high-end demand of the

hardware industry and last but not the least, the China factor were also

discussed during the session.

The conclusion–India needs to look inward, at the

opportunities that the domestic market holds. However, it was the star of the

evening, Pramod Mahajan, who summed up the best opportunities–"If only

Indian states would take up their e-governance programs seriously (and that’s

roughly 3% of their outlays), this new opportunity window alone would be many

times greater than the Rs 50,000 crore overall industry numbers that were

notched up last year. All that’s needed to get that going is realization,

acceptance, inclination and implementation–all of this finally leading to a

more meaningful and valued life for our people."

Time to look inward?



Consider the following facts. Two-thirds of the Rs 50,000-crore Indian IT

Industry is dominated by software, of which again, a bulk is exported. The

result: while the hardware industry has been in the doldrums for a while now,

the software sector’s soaring growth rate slowed down with the economic

downturn in the US. Compare this with the situation in China and one realizes

that the country has managed to bypass the IT-slowdown, primarily because it has

been focusing on the domestic market, a segment which offers vast potential that

India has failed to capitalize so far.

Highlighting the reason for this, Nasscom president Kiran Karnik

said, "Since most software sold in India is in English, the lack of local

language software hinders penetration." This was also the issue raised by

the IT, communication and parliamentary affairs minister. Asking the Indian

software industry to rise to the occasion Mahajan said, "Unless regional

language software is made available, it would be foolhardy to expect that the IT

revolution will reach remote corners of the country. Only regional content can

bring people closer to technology."

Given the abysmal PC penetration–six PCs for 1,000 people, 1.8

million Internet subscribers, it’s high time that the Indian IT industry

looked inwards to tap the massive potential. What came across strongly during

the discussion was that the efforts to boost demand would include lowering the

cost of PCs to close to the 10,000-rupee mark.

China versus India



Another focal point of the discussion was the emerging threat from China in

the software segment. While China has clearly taken the lead in the hardware

sector, the participants felt that it is now targeting the software business.

The conclusion was that China was replicating the successful Indian model in the

software segment in order to dethrone India as the software superpower. Can

India beat China in this game by doing the same in the hardware segment? Can we

really dethrone the Chinese and also retain our software superpower status for

years to come? Most participants felt that this was not a far-fetched dream

provided the government and the industry work together and provide an

environment which will promote PC sales and also induce foreign players to set

up plants in India to meet the huge demand from the domestic market.

The ‘Look up India’ debate held at the DQ IT Man of the Year

event explored these issues and much much beyond. Excerpts from the invigorating

session:

Replicating the software success story



Jairam Ramesh: The Union Budget is only 37 days away and this is perhaps the

best time to convey the mood of the industry to the finance minister. It is also

the best time to put forth suggestions that are critical for the growth of the

Indian IT industry and who would be a better person than FC Kohli to initiate

this discussion?

FC Kohli: I have a feeling that we will continue to do

very well in the software segment. The IT industry will definitely move up the

value chain, but if we want to really bail out the software industry, it has to

look inwards and increase focus on the use of software within the country. The

ideal situation would be if the growth in the domestic software market is

driving the IT industry growth a few years down the line. However, we cannot

achieve this without building up the hardware industry. While software and

hardware are the two sides of the same coin, unfortunately the hardware industry

in India is still non-existent.

We should look at removing duties from imported components if we

have to promote assembling. Today, you have a duty on components and you have

assembling costs. You end up producing a machine that costs you more than an

imported machine. So, one has to remove all kinds of constraints on the import

of components so that at least the assembling industry can survive. We missed

the bus in the hardware sector during the 70s because of the government policies

and lack of incentives for the private sector players. The budget should ensure

that proper care is taken to negate the impact of these. The market conditions

have changed and there is thus a need to mend the policies.

Jairam Ramesh: So, how do we replicate the success of the

software industry in the hardware sector?

Veer Sagar: We need to get more and more people to use

IT. The ideal way to do this would be to IT-enable back office functions. By

having more and more users, we can create a back office culture in India. More

than moving up the value chain in terms of IT in enterprises, we need to move

down the value chain because we do not have enough people placed high on this

value chain. There are, however, millions sitting at pretty lower levels–just

look at the number of unemployed graduates in the country. Look at the call

center industry, which is actually creating use of hardware. In fact, being the

largest users, call centers today offer the biggest market for the hardware

sector. This is just the beginning and we can capitalize on this by converting

India into the biggest hub, the preferred destination for back office activities

the world over. This would help the country kill two birds in one shot–we

overcome the manpower shortage created due to lack of hi-tech institutes by

making use of the human resources being made available through the existing

ones. And second, we overcome the social problem of digital divides.

Ajai Chowdhury: In addition to tackling the issue at the

component level, we need to look at excise duty as an issue limiting the

penetration of hardware in the country. A cut in excise duty will help the

industry reduce the cost of PCs and bring them within the reach of the ordinary

man.

I would suggest we bring it down to 8%. The government should

also accord 100% depreciation to IT products in order to promote corporate

spending.

Promoting IT usage in India



Jairam Ramesh: Let us now take a look at the level of IT usage within the
country and the problems plaguing the growth of the domestic market. Government

spending on IT can trigger to domestic demand. Unfortunately however, while all

governments have been asked to spend 1-3% of their budget outlays on IT, things

don’t seem to be moving that way. S Reghunathan has played a key role in the

drafting of the IT policy for the Delhi government.

S Reghunathan: As far as Delhi is concerned, it is the

mindset. For instance, if you ask a government servant why he uses a PC, he

would only talk about e-mail. People don’t even realize that the computer can

be used in many other ways. You will be shocked to know that despite being one

of the largest in Asia, the Delhi Municipal Corporation has not even appointed

an officer for computerization. There are vested interests working against such

efforts and we need to overcome such hurdles.

Jairam Ramesh: Changing a mindset requires both time and

education. But there are some other issues. For example, one major issue that

the government sector has been grappling with, is that of the contract

procedures. Should contracts for e-governance be treated in the same way as we

treat the purchase of stationery? Are we using outdated ways of contracting IT

products and services?

RS Pawar: The bottleneck is in the purchase processes.

The problem that the industry faces is because of the government’s insistence

on the lowest price in terms of rupee value. There is a fear that unless the

tender with lowest value is approved, the official concerned will be pulled up

by the CVC. However, such an approach tends to ignore the quality aspect.

Bureaucrats are not willing to take the risk of ascribing value to the

intangible. The government’s pro-active approach on IT spend should be

followed up with a mechanism of ascribing value to intangibles.

Jairam Ramesh: People have been talking about the need

for e-governance, which has actually turned out to be nothing more than an

opportunity for politicians to hog some publicity. At the ground level however,

one finds that some of the states that have spoken the most about IT, have the

least IT usage. A good IT initiative that can be singled out is the schools

project.

Satish Naralkar: Despite the fact that India has been

recognized as a major IT force worldwide, usage within the country is very low.

IT penetration is low even in the corporate sector. In fact, if the Indian

industries want to improve productivity and become more competitive, they will

have to adopt IT at a much higher level than today. However, things are changing

now. The industry is coming forward to help and now it’s the users’ turn to

get involved. They need to realize that their participation is equally

important.

Saurabh Srivastava: I feel the current recession will be

beneficial for India. There are lessons to be learnt from the Chinese model. If

you look at China and India, the two markets have evolved very differently. In

China, both the hardware and software industry are heavily focused on domestic

usage.

Phiroz Vandrevala

The threat from China



Phiroz Vandrevala: Unfortunately, everybody is grappling in the dark as
far as the Chinese story goes. The Indian IT industry does not have a single

position paper on where exactly China is placed in the global IT scenario. We

only have guesstimates of the size of their industry, the kind of work they do,

their export and domestic market share and business strategies. Nasscom is

sending a team of experts to the country and plans to come out with a report on

what is actually happening in China and its long-term strategies. Today, most of

the discussion on the Chinese threat is based on guesses and is without

substantial background information.

Jairam Ramesh: There is a growing nexus between Taiwan

and China. The Chinese strategy is to leverage Taiwan’s manufacturing

expertise and link it with the software expertise from the mainland–China.

There has been a concerted effort at relocating production facilities from

Taiwan. So we are really looking at the combined Taiwan-China threat

particularly after both of them have entered the WTO. Secondly, the Chinese are

investing heavily and very aggressively in higher education. This could be the

fallout of their repeated visits to Bangalore. They have realized that the one

area where India has left them far behind is higher technical education. It’s

interesting that they had conducted a study on setting up 100 IITs in China.

Rajat Gupta: I would say that the Chinese have been

moving very fast. They have made strategic investments and set up several IIT-like

institutions. They have hired 200,000 English teachers and are also involving

universities and other institutions in the gameplan. Education and awareness has

been a key component of China’s strategy to counter India’s might as the

software super power.

RS Sirohi: Education, particularly higher education, is

not in a very good state in the country. We need to have a large number of

institutes like the IITs. But the real problem is that we do not have adequate

faculty. Faculty in the IITs is very sparse and it is very difficult to get

faculty for other developing areas like microelectronics.

Lower costs, better content



Jairam Ramesh: Fifteen years ago, owning a TV set in India was a luxury.
Today, one out of every three Indian houses has a TV and one out of every seven

is hooked to cable TV. This proportion is increasing rapidly. We need to see how

this success can be replicated in the IT industry. The turning point in the TV

industry came when the psychological barrier of Rs 10,000 price tag was crossed.

Is there a lesson to be learned from the TV and cable revolution? Mr Shashi

Ullal, do you think such a revolution is possible in the hardware sector?

Shashi Ullal: I agree that cost is a very big factor but

what we need to do is to try and give a product a service. The time has also

come to promote indigenous technologies like the Simputer, which have the

potential to drive the growth of the IT industry. Unfortunately there is no-one

interested in manufacturing such products.

Kiran Karnik: I agree that the cost has been a big driver

for the media revolution in the country but one cannot undermine the software or

the content issue. I think what really drove the revolution in the TV industry

was the richness of content. On the IT front, the software industry needs to

introspect on whether it is creating content that can drive the hardware

industry. The two are inter-linked. One answer to the hardware issue may be to

reduce duties on all products.

Mahajan: Telecom is one issue that has not been discussed

here, perhaps because all of you are from the IT sector. However, along with an

IT body, I need a telecom soul. You can’t do IT without a telecom soul. So I

have requested the finance minister not to punish the Telecom sector for its

performance. It has been a common practice to tax the sector that has been

performing. So the first thing I want is that the finance minister should pat

the telecom sector for the reforms and let it go free without levying any

additional burden.

About the software sector, I don’t have any wish list.

Whatever the software sector wanted, has already been achieved by Dewang. About

the hardware sector, we have been deliberating with the industry and MAIT and

plan to implement whatever recommendations the industry has made. However, I do

not agree with the industry’s demand for zero excise duty. This is not

feasible. What if other industries start demanding the same too? For a country,

all its industries and sectors are equally important and preferential treatment

cannot be granted to any one. The reduction of the duty slab and an 8% duty

regime looks more feasible. There is another major issue which can only be taken

care of by the combined will of the IT sector. Today, the IT revolution in the

country is limited to 50 million people who understand English.

Jairam Ramesh: To sum up the discussion, I would like to

say that as long as IT in India remains English dominated, China will continue

to have an extra edge over us. While the industry outlook can be global, the

content definitely has to be local and until that happens, the IT revolution

cannot encompass a majority of the Indian population.

Shubhendu Parth in New

Delhi

The Look Up India event was conceptualized and coordinated by

Sushmita Sengupta of Confab (crossmindnet@yahoo.com)

In Memoriam

For the late Dewang Mehta, presiding over Nasscom was much more than a job.

It was a passion that eventually transformed a fledgling organization into the

strongest Indian voice for the IT industry. Nasscom was, in fact, Dewang’s

family. It was befitting that the DQ Lifetime Achievement Award conferred on him

was accepted by the Nasscom team

It was indeed an emotional moment for the Nasscom team members, when they

were called upon to receive the ‘Lifetime Achievement Award’ on behalf of

late Nasscom president Dewang Mehta. The last time the entire Nasscom team

attended the event was in 1997, when Dewang was presented the IT Man of the Year

Award. The solemn occasion brought back memories of the unflagging Dewang,

especially when film clips of his speeches were shown. Three team members who

were present at the award ceremony, Shahab, Rituraj, and Sangeeta shared their

feelings with Dataquest ...

Mohammed Shahabuddin manager, business development



"It was indeed a very special moment for me. I started my career here

at Nasscom in 1995. Though I am a software engineer by profession, I was more

interested in working in an organization where I could harness my managerial

skills. We started out with a setup of five people in a single room in 1995. At

around that time, Dewang expressed his happiness with our performance and handed

out confirmation letters to my colleague Rituraj and myself. He was also very

patient and was my mentor. He was very friendly and quite informal with us,

though he made sure that the etiquette was maintained in public. I fondly

recollect our gossip over plates of chaat in Bengali market, where the

discussion inevitably spanned over a range of topics. And apart from his

friendly nature, Dewang was adept at communicating with key industry honchos

without getting ruffled.

Rituraj Nath manager, business development



"When we went up there to receive the award on Dewang’s behalf, the

emotion was overwhelming and we felt very sad that he is not amongst us today.

It was nice of Dataquest to honor him and recognize his contribution. He always

exuded warmth and energy. In 1997, when he was presented the DQ IT man of the

Year award, all of us made it a point to be present at the function. Dewang had

informed us about the forthcoming event at that time. This time, it was

Dataquest Chief Editor Prasanto Kumar Roy who informed us about the lifetime

achievement award being presented to Dewang."

Sangeeta Gupta vice-president



"Going up on stage to accept the award was an emotional experience.

Dewang had been associated with NASSCOM since 1991 and steered the body to its

current level. As a team leader, he was hands on and extremely effective in

representing the IT industry in the public domain. Being called upon to receive

the award was an emotional moment for me and brought back memories of 1997 when

we attended the DQ achievement awards function to applaud Dewang on being

presented the IT Man of the Year award."

'Unless tech reaches remote corners, our mission will remain unaccomplished'

As Pramod Mahajan walked up to the podium after receiving the Dataquest IT

Man of the Year Award from NIIT chief Rajendra Pawar, the excitement in the

audience was palpable. Widely known for his oratory skills, Mahajan ensured that

his listeners were not disappointed

Politicians do not receive awards. They are used to rewards," he

quipped. This was the second time in just two months that he was receiving an

award, the first being the NASSCOM —ASOCIO award in December. Mahajan however,

attributed the previous award to his being the host minister and said that the

Dataquest award touched him more. He added, "At least this time, I assume

that those who are sitting in the audience have come to see me receive the award

unlike the last time during the ASOCIO event when there was a Shiamak Dawar show

which followed the presentation!"

Thanking Dataquest for the award, he said, "Dataquest did not even

approach me for any advertisements from BSNL and VSNL. They are trying to

encourage me. There may be many people who think that I do not deserve this

award, and I myself was somewhat surprised. I remember when I took charge as the

first ever Information Technology Minister, there was a lot of apprehension in

the industry. People were worried about whether there would be new restrictions.

But this apprehension has since then been laid to rest as the government has

made an effort to improve things.

"When the ministry came into being, the industry was very apprehensive

of what was in store. There was concern about new rules and restrictions or some

other set of issues that they might have to tackle. But fortunately, during the

last year, we have managed to do away with such fears and generate confidence. A

lot remains to be done and the government is very keen on supporting the

industry through its growth," he said stressing on the need to meet the

challenges that lay ahead.

"In India, IT is restricted by the number of people wearing ties,"

he quipped, emphasizing upon the need to create awareness, educating the masses

and providing basic connectivity. "I would like to start by providing

telephone connectivity to the villages. There should be at least one telephone

per village. Almost two thirds of the villages do not have a working telephone.

Studies from Latin America have demonstrated that the use of fax along with the

phone line lead to increased transmission of data, which is eventually the

starting point for internet access in remote localities".

He added, "Unless we take the benefits of technology to the most remote

corners of the country, our mission is unaccomplished. We have to educate the

masses, provide content in local languages and generate awareness."