Arun Shouries article on IE. Must Read

[Guest]

Before the whining drowns it out, listen to the new India





Arun Shourie



Twenty to twenty-five years ago, even 10 years ago, few of us had heard of Information Technology. Today, exports from this industry are worth $10 billion — that is, over Rs 45,000 crore a year. That figure is 20 per cent of our total exports.



In spite of the fact that each of the markets to which we supply IT software and solutions has been in the trough of recession for years, IT exports have grown by 26 per cent this year.





Infosys had not even been born 25 years ago. Wipro was a company selling vegetable oil. Indeed, other than the ‘‘Tata’’ in Tata Consultancy Services, there is scarcely a name in the IT industry that was known then.



And guess what the average age is in the industry? Just 26 and a half! These 26/27-year-olds have changed the world’s perception of India. It’s not just a country of snake-charmers, it’s a country against which protectionist walls have to be erected. Of course, we can also charm snakes.



And not just, to pluck a phrase of Malcolm Muggeridge, snakes in snakes’ clothing!



And these 26-year-olds are changing India’s perception also of itself: that India can; that, therefore, we should face the world with confidence.



That is the situation in activity after activity. We lament the fact that, while we are ahead in software, we have lost out to China in IT hardware. That is true — as of the moment. We shooed away firms like Motorola when they approached us in the early 1990s for facilities to set up manufacturing operations in India. China welcomed them, it wooed them, it created every conceivable facility for hardware firms from Japan, of course, but also from Taiwan, a country at which 400 of its missiles are aimed. It has thereby leapt ahead.



But the game is hardly over. That world-class hardware can be produced in India is evident. How many of us would have heard of Moser-Baer? Located in unprepossessing Noida, it is the world’s third largest optical media manufacturer, and the lowest-cost producer of CD-Recorders. Its exports are close to Rs 1,000 crore.



The firm sells data-storage products to seven of the world’s top 10 CD-R producers. And it produces them so efficiently that, to shield themselves, European competitors had to file an anti-dumping case to stop and penalise its exports to Europe. Moser-Baer fought on its own. And won.



A firm most of us have not heard of. A firm that is manufacturing products at the cutting edge of technology. A firm exporting Rs 1,000 crore of products that require the utmost precision and technological sophistication. A firm that European firms fear.



And equally important — the very international fora that our ideologues shout are instruments of exploitation hold against European firms, and in favour of this Indian firm.



There is more. Moser-Baer has acquired Capco Luxembourg, a firm that owns 49 per cent of a Netherlands-based CD-R distributor. And it has set up Glyphics Media Inc. in the United States—for markets in North and South America. And here we are being made to shiver at the thought that foreign firms are about to swallow us!



Heard of Tandon Electronics? Its exports of electronic hardware are close to Rs 4,000 crore!



At a moment’s notice, my friends Amit Mitra of FICCI and Tarun Das of CII send me particulars of firm after firm, in sector after sector, that has broken new ground. A sample:





• Fifteen of the world’s major automobile manufacturers are now obtaining components from Indian firms.

• Just last year, exports of auto-components were $375 million. This year they are close to $1.5 billion. Estimates indicate they will reach $15 billion within six to seven years.



• Hero Honda is now the largest manufacturer of motorcycles in the world—with an output of 17 lakh motorcycles a year.



• One lakh Indica cars of the Tatas are to be marketed in Europe by Rover, one of the United Kingdom’s most prestigious auto-manufacturers under its — that is, Rover’s — brand name.



• Bharat Forge has the world’s largest single-location forging facility — of 1.2 lakh tonnes per annum. Its client list includes Toyota, Honda, Volvo, Cummins, Daimler Chrysler. It has been chosen as a supplier of small forging parts for Toyota’s global transmission parts’ sourcing hub in Bangalore.



• Asian Paints has production facilities in 22 countries spread across five continents. It has recently acquired Berger International, which gives it access to 11 countries, and SCIB Chemical SAE in Egypt. Asian Paints is the market leader in 11 of the 22 countries in which it is present, including India.



• Hindustan Inks has the world’s largest single stream, fully integrated ink plant, of 1 lakh tonnes per annum capacity, at Vapi, Gujarat. It has a manufacturing plant and a 100 per cent subsidiary in the US. It has another 100 per cent subsidiary in Austria.



• For two years running, General Motors has awarded Sundaram Clayton its ‘Best Supplier Award’; the volumes it sources out of India are growing every year.



• Ford has presented the ‘Gold World Excellence Award’ to Cooper Tyres.



• Essel Propack is the world’s largest laminated tube manufacturer. It has a manufacturing presence in 11 countries including China, a global manufacturing share of 25 per cent, and caters to all of P&G’s laminated tube requirements in the US, and 40 per cent of Unilever’s.



• Aston Martin, one of the world’s most expensive car brands, has contracted prototyping its latest luxury sports car to an India-based designer. This would be the cheapest car to roll out of Aston Martin’s stable.



• Maruti has been the preferred supplier of small cars under the Suzuki brand for Europe. Suzuki has now decided to make India its manufacturing, export and research hub outside Japan.



• Hyundai Motors India is about to become the parent Hyundai Motors Corporation’s global small car hub. In 2003, HMC will source 25,000 Santros from HMI’s plant in India. By 2010 HMI is targeted to supply half a million cars to HMC.



It was only in 1999 that HMI got its first outsourcing contract and already, in 2003, 20 per cent of its sales will be what it supplies as an outsourcing hub. It is exporting cars to Indonesia, Algeria, Morocco, Columbia, Nepal, Sri Lanka and Bangladesh.



• Ford India got its first outsourcing contract in 2000. Within 3 years outsourcing accounts for 35 per cent of its sales. Ford India supplies to Mexico, Brazil and China. The parent Ford is sourcing close to $40 million worth of components from India, and plans to increase these in the coming years.



Ford India is already the sole manufacturing and supply base for Ikon cars and components. These are being exported to Mexico, China and Africa.



• Toyota Kirloskar Motors chose India over competitive destinations like Philippines and China for setting up a new project to source transmissions as this option proved more economical.



• Europe’s leading tractor maker, Renault, has chosen International Tractors (ITL) as its sole global sourcing hub for 40 to 85 horsepower tractors.



• Tyco Electronics India bagged its first outsourcing contract in 1998-99. So successful has it been that components and products others have contracted from it already account for 50 per cent of its total sales. It supplies to the parent, Tyco Europe.



• TISCO is today the lowest cost producer of hot-rolled steel in the world.



• TVS Motor Company has been awarded the coveted Deming Prize for Total Quality Management. Many of the largest of organisations, even American ones—like GE—have not managed that recognition yet!



India’s pharmaceutical industry has come to be feared as much as its infotech industry. It is already worth $ 6.5 billion and it has been growing at 8-10 per cent a year. It’s the fourth largest pharmaceutical industry in terms of volumes and 13th in value. Its exports have crossed $2 billion, and have increased by 30 per cent in the past five years. India is among the top five manufacturers of bulk drugs.



Even more telling is another figure. We are always being frightened, ‘‘Multinational drug companies are about to takeover.’’ In 1971 the share of these MNCs in the Indian market was 75 per cent. Today it’s 35 per cent!



There’s another feature we should bear in mind: India’s strengths are becoming evident across the technology spectrum:





• We are among the three countries in the world that have built supercomputers on their own, the US and Japan being the other two: two months ago, the fourth generation PARAM super-computer was inaugurated in Bangalore.

• We are among six countries in the world that launch satellites. We launch some of our own satellites of course; we have launched satellites for others too, among them such countries as Germany and Belgium. We have the largest set of remote sensing satellites. Our INSAT system is also among the world’s largest domestic satellite communication systems.



At the other end:





• India is one of the world’s largest diamond cutting and polishing centres. CLSA estimates nine of every 10 stones sold in the world pass through India.

• Trade of Indian medicinal plants has crossed Rs 4,000 crore.



Here is proof positive that liberalisation has indeed worked. ‘‘By opening the economy before giving it a chance to become competitive, we have thrown our industry to the wolves,’’ it used to be said. Quite the contrary. The success in exports, in fields such as IT in which competition is fierce, in which technological change is fast as lightning, success in auto-components, in pharmaceuticals shows that our industry has fought back, it has become competitive.



Remember all that shouting about Chinese batteries a year ago? ‘‘Markets are closing down, thousands are being thrown out of their meagre businesses, factory after factory has shut down.’’ That was the shouting just a few months ago.



Where are those batteries from China? Yes, trade with China has grown—by 104% in the past year. But according to figures of the Chinese Government, in the first five months of 2003, India has amassed a surplus in its trade with China, a surplus of close to half a billion dollars.



And China is just an instance. Exports as a whole, and in the face of an unrelenting recession in the West, have grown by 19 per cent in the year. In a word, what committees upon committees with their piles of recommendations would not have achieved, being actually exposed to actual competition has.



Our foreign exchange reserves are at an all-time high—$82 billion. We have announced that we will not be taking aid from a string of countries.



• We are giving aid to 10 or 11 countries.

• We are pre-paying our debt.

•We have just ‘‘loaned’’ $300 million to the IMF!



How distant the days when we used to wait anxiously for the announcement about what the Aid India Club meeting in Paris had decided to give us.



But there is the other side—equally telling. Why is it that so few among us know even the elementary facts about these successes? Why is it that so much of public, specifically political, discourse, when it is not whining is just wailing?

[Guest]

SPECIAL TO THE EXPRESS: PART II



When sky is the limit



Arun Shourie





The problems that have bedevilled Japanese banks are well known — the quicksand of ‘‘directed lending’’, NPAs, and the rest — as is the way these problems have been at the heart of Japan’s inability to pull itself out of the trough for over a decade. The Long Term Credit Bank of Japan, the giant LTCB, followed the same trajectory as other banks, except that it has suddenly, in just two years, shot out of the pack.



LTCB was established in 1952. It was one of the principal financiers of Japan’s phenomenal industrialisation after World War II. As the 1990s rolled on, its troubles became deeper and deeper. It went bankrupt. To prevent the collapse from bringing down other parts of the banking sector, the Government had no alternative but to nationalise the bank. That was in 1998.





The bank continued to haemorrhage. Soon, in June 2000, it had to be sold to a consortium of international investors. That was a thunderclap for Japan — this was the largest organisation that had to be sold to foreigners. The bank was renamed the Shinsei Bank.



In just two years, it has turned around, even as others are still in the morass of old problems. It turns out that Indian professionals — a thousand of them from Nucleus Software Exports, Mphasis, Polaris, i-Flex Solutions and Wipro — have played a crucial role in transforming the bank: they are the ones who have completely re-engineered the bank’s processes, they are the ones who have reorganised the bank’s operations around a completely new, modern business model.



And they have done it all in record time, and with record economy: the new, transformed retail bank has been launched within one year instead of the anticipated three; implementation costs have been 90 per cent less than estimated; a range of new financial products has been launched that are better than what competitors are giving; hardware too has been drastically downsized. When I was in Tokyo a few weeks ago to open an Indian IT fair, the success of these professionals in rehabilitating the Shinsei Bank was the talk of the banking and IT community in Japan.



What is it that Indians could bring to this task that, say, Chinese software firms could not? The Indians could not just write software for different functions and transactions that the staff of the bank had to perform — the Chinese too could have done this: China also has a very large software industry that today caters to its domestic IT market, a market which is many times that in India.



The Indians could bring to bear on the task expertise in a host of other domains — for instance, knowledge of financial markets, of modern commercial banking, of accountancy — and thereby provide not just software but complete solutions, from software to hardware to completely new business models.



Similarly, high-end Indian garment industry can avail of not just cheaper labour. In addition it can tap into our fashion designers. Is it any surprise then that Wal-Mart sources $1 billion worth of goods — that is, half of its apparel — from India? That GAP sources $500-600 million from India? That Hilfiger sources $100 million?



The point is the successes we have encountered above are not fortuitous. India has a score of strengths that others do not.



Cost is one of them. Nor is it a marginal advantage. Indeed, the difference between the cost at which we can provide services and many commodities of comparable quality and what those cost in the developed world is so vast that, should those firms and economies shut themselves out from our supplies, they are the ones who will be severely disadvantaged, they are the ones who will be making themselves un-competitive.



• Indian IT firms provide world-class services at one-tenth what the same services would cost in the United States.



• An MBA costs about $5,000 in India. In the US, an MBA costs around $120,000.



• Developing a new automobile model in the US costs about $1 billion. Indica and Scorpio have been designed, developed and produced totally in India. They have been acclaimed abroad, and found to be up to international standards. The cost of designing them? Less than half what the design would cost in the US.



• In an important address — you will find it in FICCI’s publication, Unleashing India’s True Potential: CEO’s Vision of the Future — M.S. Banga, chairman, Hindustan Lever, reports results of inquiries that the company made. In spite of high power costs, high interest rates, it found that the capital costs of setting up plants in India to produce an item like toothpaste for Levers worldwide were just 35 per cent of what its sister companies in the US and Europe would have to spend. And the conversion costs were just 15 per cent. In tea bags they were just a quarter of what they would be in the US.



Sourcing already accounts for about half of Hindustan Lever’s exports of Rs 1,500 crore a year. But Banga surmised, by being just the hub from which Levers’ units worldwide would source their requirements of such goods, Hindustan Lever could build up a business of $1 billion a year — that is Rs 5,000 thousand crore a year. Moreover, as it would be marketing directly to these companies, it would save on the costs of reaching, winning, retaining the individual customer.



• Surgery: Arvind Netralaya performs a cataract operation, including the cost of the lens, for $12; that very operation costs about $1,500 in the US. A bypass surgery in India costs around Rs 40,000; in the US it can cost anything upwards of Rs 6 lakhs. The cost of open-heart surgery in the UK or the US can be anywhere between Rs 15 lakhs and Rs 35 lakhs as against Rs 1.5 lakh to Rs 5 lakhs in the best of hospitals in India. The cost differentials in more complicated surgeries — liver and kidney transplants, etc — are even higher.



Brains are another strength — far, far more important than material resources in several sunrise activities. Most would have been surprised to read recent accounts in magazines such as Business World of India being looked upon as a research hub by company after choosy company. FICCI’s list includes:



• Over 70 MNCs, including Delphi, Eli Lilly, General Electric, Hewlett Packard, Heinz and DaimlerChrysler, have set up R&D facilities in India in the past five years. Together with laboratories set up before 1997, 100 of the Fortune 500 have set up R&D facilities in India. By contrast, only 33 of the Business Week 1000 companies have R&D centres in China.



• The scale of these operations also tells the tale. Just four years ago, Intel had a mere 10 persons working in India; today it has over 1,000. GE’s John F Welch Technology Center in Bangalore is the company’s largest outside the US. With an investment of $60 million, it employs 1,600 researchers. GE’s R&D centre in China by contrast employs only 100.



The Indian centre devotes 20 per cent of its resources to fundamental research having a five to 10 year horizon in areas like nanotechnology, hydrogen energy, photonics and advanced propulsion. With 17 clinical trials (10 of them global), the Eli Lilly research facility at Gurgaon is its largest in Asia and the third largest in the world.



• GE Medical in Bangalore has developed a high resolution-imaging machine for angiography to meet GE’s entire global requirement. It has also developed a portable ultrasound scanner that is exported around the world from Bangalore.



• Two-thirds of GE Plastics’ 300-member research team in India is doing fundamental research on molecules. GE Plastics has contributed to the development of a family of polycarbonates of engineering plastics that are being used in auto headlamps and CDs. It has also developed heat resistant monomers for applications in aircraft bodies and high-end medical equipment.



• GE Motors India has developed an almost noiseless motor for GE’s most sophisticated washing machine lines in the US; it is the sole sourcing point for a million of these motors every year.



• Monsanto has been in India for over 50 years. After examining China and India, it set up its first non-US research facility in Bangalore in 1998. This facility is responsible for Monsanto’s R&D for Asia. The company is researching ‘‘promoters’’ — accelerators that improve crop productivity.



• Whirlpool’s Pune Research Lab develops refrigerators and air conditioners for Asia (including China) and Australia. Forty per cent of this facility’s resources are devoted to its core research on global projects.



• The DaimlerChrysler Research Centre in Bangalore is engaged in fundamental and applied research in avionics, simulation and software development.



• HP Labs India has built a prototype that can scan handwritten mail through a small handheld device instead of a scanner. It has also built the prototype of a computer for unsophisticated users.



You can extend the list many times over by just following our business newspapers and magazines for a week. Moreover, while youthful professionals and entrepreneurs have been adding these sinews, the most far-reaching structural change has taken place:



• The proportion living below the poverty line has fallen from 36 per cent to 27 per cent.



• The balance of power between state and society in the economic sphere has been overturned: the dismantling of the licence-quota raj, the transfer of power to regulators in one sector after another.



Indeed, not a week passes and there is yet another advance in economic management. One reason these changes do not get adequate notice is that, many of the structures having been set up, the improvements are now in the details. Those who are acquainted with economic policy and administration know that each of these improvements will have far-reaching consequences as the years go by. But as the improvements are in the details, most of us miss their significance.



As a result of such steps, many of the handicaps that hobbled our entrepreneurs have been eased in the past few years. Initiatives in different, seemingly distant fields have reached fruition. And the effect is not additive, it is multiplicative:



• The turnaround time in our ports used to be eight to 10 days; it is now four-and-a-half days.



• As recently as 1999, our telecom infrastructure could provide a bandwidth of only 155 Mbps; today it is able to provide terabit capacity, that is, 75,000 times what could be provided just four years ago. Within a year or so, as the fibre optic network being laid by various enterprises gets in place, it will not matter whether your office is in San Jose, California or in any of 300 cities in India.



• Till the other day we used to be in awe of the rate of expansion of mobile phones in China — a million a month. In the past two months these have increased in India by almost 1.5 million a month.



• Long distance telephone tariffs have fallen by two-thirds in five years.



• Tariffs for data transmission have fallen by 80 per cent in three years.



• The work done by the far-sighted people who set up what seemed at that time such an esoteric institution, one oriented to the rich elite, the National Institute of Design has borne fruit. Today graduates of that fine institution help design cell phones, CAT-scan and MRI machines ...



Other handicaps too have been eased. Interest rates have come down drastically, foreign exchange restrictions for business purposes are as good as non-existent ...



On the other side is the fact that the developed world will increasingly require services and personnel from a country such as India. We are the ones who have to be swift enough to prepare for and grab the opportunities:



• Various studies conclude (you will find them summarised in the All India Management Association’s India’s New Opportunity - 2020) that the workforce of developed countries will fall short by 32 to 39 million by 2020. In the US alone the shortfall is expected to be between 8.2 and 14.3 million.



• The proportion of the aged to persons in working age is shooting up precipitously in developed countries from Germany to Japan.



Such developments provide excellent opportunities for India — for services that have to be provided in situ such as nursing and care for the elderly, for services such as surgery that can be provided to residents of those countries upon their coming here. In fact, there are opportunities in a host of new services of an even higher order, and ones that exist not in the future but right now:



• Higher, specially medical and engineering education: educating an MBA to world standards costs $9000 in India; in the US that degree of education costs $30,000.



• Editing, composing, formatting text, from books to newspapers: a sub-editor costs an American paper $25,000; in India an excellent substitute can be employed for $5,200. The editor of an Indian paper told the proprietor of a leading British paper the other day he could edit the latter’s paper for merely the amount that the latter’s publication spent on renting the space occupied by sub-editors in the publication.



• Printing and binding books: Hong Kong and Singapore, which had taken a leap in this regard, have become high-cost centres.



• India has exactly the same order of cost-cum-competence advantage in professions like law, accountancy, design, engineering, tax consultancy, financial services of all kinds.



• In software itself, though there have been the most conspicuous successes, the field is limited only by our imagination — in that IT fair in Tokyo that I mentioned, I saw fine text-to-voice software that has been developed by a small software unit in Lucknow. It was receiving excellent reception in Japan. It can be used to quickly produce audio versions of books upon books for the visually impaired.



Thus, on the one side the opportunities are unlimited; on the other we have incomparable advantages for grasping them. But as has been said, ‘‘When opportunity knocks, some complain about the noise.’’



Software engineers or cyber coolies? runs the headline of a newspaper feature. In the US a software engineer earns $21 an hour, in India even the leading companies pay him only $2, runs the text. Is this not exploitation? it asks.



Now a salary of Rs 100 an hour is excellent for someone living and working in India. Why throw away the advantage? Look at it the other way. China has accumulated its huge pile of foreign exchange reserves — over $280 billion — not by high-technology exports. It has accumulated them by flooding the world with low-technology items — leather, leather products, garments, toys ... And it has used the advantage of lower cost — and perfectly disciplined labour — to the hilt.



China’s achievement we gape at: ‘‘How have they become the manufacturing hub of the world?’’ we ask. But our advantage — in some senses the very same advantage China has put to such good use — we want to throw away.



Keep these foreign accounting firms out, proclaim our accountants at a high-profile function. They have been involved in frauds abroad. On that reasoning, shouldn’t we bar our own accounting firms also? After all, frauds in our banks, in our stock markets, the way so many of our firms that have run up NPAs are then able to extract bail-out packages from financial institutions, could such things have happened if our accounting firms had been doing their job?



And there is the other point: we want their accountants and lawyers to be kept out, but they must open their doors to our IT professionals! As the title of one of Jairam Ramesh’s monographs ran, Yankee Go Home — But Take Me with You!



Why not look upon the opportunities positively? Why not institute courses in our law colleges on Germany’s legal system, in the accounting systems of the US and thereby capture the markets there? Why not multiply the number of nurses we train, and have them learn Japanese? Why not enable private firms to open world-class universities in India, and thereby become educators to the world?

[Guest]

This is India’s moment but it’s only a moment, can we grasp it?



Arun Shourie





On the one hand, we have unbounded opportunities and incomparable advantages to seize them. On the other, there is the fate that will surely befall us if we falter. Unemployment will reach such proportions that social unrest will become unmanageable. Similarly, if the rates of growth of India and China continue to differ by the margins of the past 15 years, within the next 15 years the



Chinese economy will be six times that of India. And the consequences will be worse than we can imagine.





Economic strength is itself power. To take one instance, because China has been able to attract so many more to invest than we have, China today is able to mobilise so many more—American firms, for instance—as lobbyists to advance its interests.



Moreover, economic strength gives China the wherewithal to go in for comprehensive modernisation of its armed forces. Indeed, that there is so much talk of China’s economic transformation obscures what China is already doing, what its economic modernisation already enables it to do in the military sphere.



Will a China six times stronger than India not administer another slap at us? Indeed, will it have to administer a slap? Will an India dwarfed to that extent not learn to pay heed to China’s interests subliminally?



PREVIOUSLY



» PART II: When sky is the limit

» PART I: Before the whining drowns it out, listen to the new India





Now it is nobody’s case that China is free of problems. Quite the contrary. The achievements—the incredible infrastructure built in Shanghai, for instance—themselves remind us of problems it may be storing up: this infrastructure has been built by getting the country’s banks to lend money to the special purpose vehicles that were created for building the projects. But everything has to be paid for in economics: what is the rate of return of these projects today, and how does it compare with what is needed to repay the investments?



There is moreover a fundamental issue. The 21st century is going to be the century of knowledge—of its continuous unraveling and of its continuous application. One of the central lessons of the 20th century is that where the state is pervasive, creativity does not flourish. The Chinese have indeed transformed their state. But it remains pervasive. How will they ensure creativity—of the kind, say, youngsters in our IT firms have displayed?



So we have many things working for us. In many ways, this is India’s moment, even vis a vis China. For the first time, observers have begun to voice questions in public about China—its statistics; the fact, for instance, as a German investor said recently at a conference I was deputed to attend, that, ‘‘If you want your factory to come up quickly, go to China; if you want to make money, go to India.’’ On the other side, everyone’s noticing Indians make a mark in every sphere: writers, scientists, doctors, IT, cricket, beauty pageants, chess...



So it is the moment for India. It is a moment. But, it is only a moment. What should we do to ensure we grasp it?



First, we should begin to notice what is happening around us. We have become what an American author calls ‘‘Negaholics’’—addicted to the negative as an alcoholic is to drink. Ever so many of us are unaware of even the elementary examples that have been listed above.



Nor is that the result merely of inattention. We look for, we latch on to the negative; even if some achievement breaks on to our mental screen it does not percolate into our awareness, we do not see that it is part of a pattern, that it is not an isolated fluke. Indeed, our instinct is not to believe evidence of that accomplishment.



Remember how eager many commentators were to find fault with NSS data that established a steep decline in proportions living below the poverty line? These are symptoms of a habit. Remember the exercise that books on creative thinking recommend? Is there much blue around you? You would not have noticed much. Now make an effort to look only for blue things around you. You will notice so many that, though they were lying around, had not registered.



It is especially important that those who are in public life—who hold public office, who participate in public discourse—break out of this addiction to the negative. Because of my work, I have had occasion to travel abroad several times in the past two-three years. Each time I have been struck by the contrast between the way India is looked upon abroad, and the way we look upon it here.



There is an equally telling symptom here at home—there is much greater confidence in the Indian industrial class than there is in the rhetoric of politicians who ostensibly are shouting on behalf of and to save that industry!



The result is our discourse continues to be mired in fear, so many of us just keep repeating slogans of 30 years ago. We should listen to the new India.



Next we should be alert to what the critics of reform are doing where they are in power. In New Delhi, the CPI(M) shouts against even the slightest attempt to reform—for instance, privatise—a public sector unit, they bring woe upon anyone who may say that repeated revival attempts having failed, such and such firm has to be shut down.



But in West Bengal the state government has already shut down two state-owned units, it is disinvesting 10 more. It’s just that the state government does not talk of ‘‘disinvestment’’, it says it is just turning the firm over to a joint venture partner!



Remember Ajit Jogi’s hysterics over Balco? Remember his threat ‘‘Should anyone from Sterlite enter Chattisgarh, we will break his legs’’? Since then his refrain is ‘‘Sterlite is scripting the success-story of Chattisgarh’’! More important, he is today the leader in public sector reform! Including privatisation! The Indian Express reports he has already closed thirty seven public sector units.



Remember all that shouting, ‘‘Why are you selling profit-making companies?’’ The Housing Board—HUDAC—Jogi has just closed down has been a profitable concern, reports The Indian Express. Remember all that shouting ‘‘But the land of Balco is itself worth Rs 1,000 crores’’? Reporting about that Housing Board, the Express correspondent writes from Raipur, ‘‘The assets ... also include some prime properties and a land bank of approximately 600 acres of land. In Raipur itself, HUDAC owns 300 acres of prime land near Tatibandha—an upcoming commercial area. Bhilai and Durg towns are also key urban towns where HUDAC had purchased land ... Other assets, according to the HUDAC balance sheet, include hundreds of unsold HIG, MIG, LIG and EWS houses, shops in urban complexes and other properties ...’’



A simple rule of self-denial among political parties would help: ‘‘Do not block another party from doing what your own party is doing where it is in power.’’ As parties are unlikely to deny themselves even this much, journalists and others should bring the rule into being in effect: keep an eye on what the party is doing where it is in power, recall what it was doing when it was in power and, each time the party tries to stop a rival from prosecuting a reform, broadcast those facts, grill its leaders on them.



There is a more intractable problem—a central dissociation between democracy as we know it in India and what is needed for rapid growth.



All change involves dislocation. And this is where the strengths of yesterday become the handicaps of today. BSNL has one of the world’s most extensive networks of copper-wire. But people are switching to wireless telephony. Every time there is a proposal for new technology, our first thought is, ‘‘But what will happen to the thousands of crores that have been sunk into that network?’’



Nor is the drag confined to governments. As BSNL has been purchasing copper wire worth Rs 2,000 to 4,000 crore every year, 30 or more companies have come up that can survive only if BSNL continues to purchase copper wire! Their owners and the workers employed in them too would rather that the switchover to new technologies is slower.



That is how over the decades the Civil Aviation Policy becomes the policy for Air India rather than for India. That is how our finances get sucked into quicksand—that is how we continue to ‘‘protect’’ existing producers of wheat and rice with ever higher minimum support prices even as government godowns overflow with stocks, and even though we know that these support prices are in fact preventing the crop diversification that other programmes of government are trying to promote; that is how a state like Maharashtra brings its finances to the brink by continuing subsidies to sugar growers; that is how over the years we squander Rs 10,000 or 15,000 crores keeping obsolete mills of the National Textile Corporation (NTC) on artificial respirators rather than using the money to modernise the textile industry; that is how we continue to guarantee procurement of tobacco, of all things, even as we spend crores admonishing people to abjure it; that is how, ostensibly to protect existing tenants, we continue rent control laws, thereby discourage investment in housing and thus ensure both housing shortage and urban decay.



We block voice-over-internet for long, we set the police upon youngsters who have begun using the technology; for years we won’t allow personnel of IT firms to avail of the Closed User Group facility—lest the revenues of BSNL get affected ... It is as if we were to block the introduction of the automobile to protect carpenters who are making tongas. Without doubt, one of the reasons West Germany and Japan forged ahead of the United kingdom after World War II was that the entire industrial stock of those two countries had been bombed out of existence while that of the latter had survived.



In the end, all such efforts fail. One cannot block technology any more than one can block time: in the end Bangladesh has had to close down the largest jute mill in the world, in the end we are having to close down NTC mills ... But over the years we ensure our country’s progress is slowed down, and our governmental finances are brought to the brink.



The problem becomes all the more acute in a democracy, all the more so in what we have made of democracy. The electorate has been so fractured by caste and the rest that it does not respond to national issues. To attain office and retain it, therefore, parties have to aggregate votes, section by section. Each section liable to be dislocated by change—the tobacco farmer no less than the textile mill owner and the powerloom operator—is able to suborn parties and politicians to block that change.



Of course, in due time a constituency will arise of those who have benefited from the change—the IT professionals, the ones who will prosper if only we were to allow our entrepreneurs to set up institutions of higher learning ... But they are in the womb of the future. And the ones who will be dislocated are ones who will defeat the party today. As the horizon of political parties seldom extends beyond the forthcoming election, even a bit of aggressive shouting can ensure that reform is deferred.



There is another factor that confounds everyone into submission. All politicians are nervous—witness our nerves before every reshuffle! Politicians faced with elections are more so. And no one quite knows what issues are on the people’s mind. So the moment a step is mooted, everyone can, and does, proclaim, ‘‘Not just now, elections are round the corner. People will turn against us.’’



Was disinvestment an issue in any of the elections during the past five years? If free power could have won elections, how come the Akalis in Punjab, the DMK in Tamil Nadu were swept away? I well remember a meeting in a state on the eve of elections there, and what was being said ‘‘on the sidelines’, ‘‘Please get (the chief minister) to abolish (a local tax) ... If only it is removed, we will sweep the urban areas.’’ It was abolished. The urban areas swept away the alliance.



There isn’t much that can be done about the politicians’ nervousness, except to go on pointing out reforms are not the issue they are made out to be: internal bickering has brought defeat to parties not issues like disinvestment or tariffs.



But the problem—the dislocations that change will cause—is real and we have to attend to it. Four things can help.



We should multiply outlays on activities that will engage large numbers, and are things that we should be doing in any case. The Planning Commission has prepared three first-rate reports, for instance—on biofuels, on bamboo cultivation and products, and on medicinal plants. Each of these can engage millions. As can organic farming, diversification into vegetables and fruit and floriculture. As can water harvesting.



When activities like these flourish, incomes will multiply, nutrition will improve, fewer will flock to urban slums. Indeed, through them the country would register gains even in foreign exchange—outlays on biofuels would save on imported crude; organic farming, medicinal plants would bring foreign exchange.



Similarly, projects that entail huge earthworks—the Prime Minister’s Quadrilateral and gram sadak projects, the linking of rivers—can absorb millions who may be dislocated and at the same time unleash the country’s productive potential. They are the real social security that will cushion our people.



But the main solutions lie, as usual, not in the economic realm. They lie in political arrangements, in discourse. We must reduce the frequency of elections: schedule elections, as the vice-president and the deputy prime minister have proposed, to state assemblies and to the Lok Sabha simultaneously; fixed terms for legislatures even as individual ministers can be voted away for dereliction.



Even before such changes are put into effect, and even after they have been instituted, we have to make everyone see that change cannot be blocked. The more we succeed within India in delaying it, the greater the lead that others will get over us. Schemes to rehabilitate and reposition workers or farmers who may be dislocated must, of course, be devised and executed. But the project or technology must not be blocked.



Soon enough that project will have to be executed in any case; soon that technology will come to be adopted. Time will have been lost. Resources that could have been used for modernisation of that enterprise, that industry, for the prosperity of that very region would have been wasted in keeping that obsolete technology or enterprise ‘‘alive’’.



And we must with evidence induce everyone to see that more often than not the resources needed to take care of and re-equip those who will be dislocated are embedded in the obsolete enterprises themselves. Look at the land NTC’s mills have in Mumbai. If only the government would be allowed to sell it, more than enough would be available to retrain and re-equip every single worker in those mills, as well as to modernise the mills that are to survive.



Not the details of economic policy—that is not where the impediments lie. The way we look at things, our discourse, the drag of interests that are vested in the way things are—these are what we need to change. (Concluded)

[Guest]

PART I
<b>In infotech, we have a headstart so let’s not put up our feet
ENSURING IT REMAINS INDIAN TERRITORY </b>
<i>ARUN SHOURIE </i>

JUST 600,000 persons working in our information technology sector today create $ 16 billion worth of wealth every year. IT exports are liable to touch $ 13 billion this year - that is, in spite of recessionary conditions in their principal markets, our IT professionals and firms will earn about Rs 60,000 crore for the country in foreign exchange. Those earnings will account for over one-fifth of our total exports.

Such figures represent phenomenal, spectacular growth: 15 years ago the activity was hardly known; just five/six years ago the figure was not $ 16 billion, it was $ 5 billion. Similarly, but for the successes of this small number of firms and personnel, our export performance would have looked very different from what it does today. And with that the level of foreign exchange reserves too would have been substantially lower.

More significant for the future,
• India and Indians have contributed significantly to the growth of this field - one-third of the start-ups in Silicon Valley were by Indians.

• We are today one of the principal knowledge-generators in this field - over 100 of the Fortune 500 companies have set up R&D centres in India. Among these are some of the world's cutting-edge IT firms - Intel, IBM, Microsoft, Motorola, Hewlett Packard, SAP, Sony, Samsung, Texas Instruments. Each of them relies on and seeks to avail of India's strengths in IT.

• We export IT and IT-enabled services to over 133 countries. Our firms are training people in IT in 55 countries. A single Indian firm - NIIT - today runs 100 training centres in, of all places, China. The government itself is setting up training centres for people in other countries.

The other day, the prime minister inaugurated the Kofi Annan Centre for Excellence in Accra, Ghana, for the people of west Africa; in March he will be inaugurating a Cyber City in Mauritius for the people of east Africa - a project that accounts for about half of a $ 100 million credit line to the country, the rest to be used to provide other IT-related services, like education.

• Our IT firms have become standards of excellence: today three-fourths of the world's CMM Quality level V companies are in India

They are providing software services, of course; they are also contributing to the creation of software products. When I ask my colleagues in the Ministry of Information Technology for some recent examples, they list scores in no time. The Pramati studio/server has been rated among the top 10 in middleware; an i-Flex Banking product has been among the top three for three years in a row — from 2000 to 2002 — and is today the world’s number one.

We often regret that while we have made impressive strides in software, we have lost out to China, Taiwan etc, in hardware. There is much weight in the lament — and addressing it has to be a priority for the government. But we should not lose sight of the other side — that a number of high technology hardware products are being designed in India for the global market. The Philips DVD video codec; the Apple iPod audio codec; the Texas Instruments’ OMAP; Microsoft’s JSharp; the Adobe reader for Palm and iPaq; Intel’s ‘‘start up’’ utility; Cisco’s IOS core components; Hewlett Packard’s ux; the OpenView kernel; components of Oracle’s Pro-c; MBIL is the third global optical disk manufacturer; VXL Instruments is the third global terminal manufacturer; HiCal supplies magnetics for the world’s foremost mobile handset manufacturer, Implusesoft; the manmar imaging software for ultrasound scanners; Purple Vision’s signal processor — these and many more hi-tech products have all been substantially designed in India.

• Another factor that augurs well for the future is that we are rapidly expanding the infrastructure required for the future growth of this sector — we have already laid out 500,000 km of fibre optic network; the other day I had the privilege of inaugurating Param Padma — the fourth generation of Indian supercomputers, entirely conceived and put together in India; we have taken the first giant step in grid-computing: the link between Bangalore and Pune is already operational — soon, the grid will link major research institutions in nine cities.

But we cannot afford to rest for a moment — especially because this is a sector in which technologies change like lightning, and because the very success that our firms and professionals have secured has made them the target of many a protectionist manoeuvre.

What are the trends that our IT industry has to face? What steps should we be taking in the face of those trends?

Telling the trends

The first, of course, is the fact that our rivals are also adding strength to their operations just as we are. Ireland, Israel etc, were traditional centres for the kinds of services we are providing today. Countries such as China and Vietnam are acquiring the competence rapidly. Moreover, there are a slew of countries that will be joining the European Union from May 2004 — from Cyprus to several in eastern Europe.

Firms operating in these countries will naturally acquire preferred liaisons with European firms that seek reliable, cheap IT services — the firms will be part of the same economic bloc; there is in a sense the advantage of cultural affinity; there is that much lesser prospect of a backlash about loss of jobs in the countries that will outsource to them.

And we should not forget that several of these countries have special strengths — not many of us know, for instance, of the great competence countries like Hungary and tiny Bulgaria have in mathematics; few of us know countries such as these had been assigned specific areas during the Soviet period in which they then specialised, and that these specialisations — encryption and surveillance technologies, to take just two instances — today constitute excellent springboards for providing many IT-related services.

Second, as the past two/three years have reminded us, we have to be ever alert to the vicissitudes of our markets. And that for several reasons. Eighty to 85 per cent of China’s software industry is directed at meeting the demand for IT services within China. In our case, almost the same magnitude is directed at meeting demand outside India.

Also, our IT exports are heavily concentrated on a few countries — the US accounts for almost 60 per cent. Recessions, turbulence, backlash in these few countries can thus have disproportionate effects on our firms here.

And how a particular development will eventually affect us is not always evident. The recent recession in western economies, for instance, created contrary pressures: on the one hand, it intensified the pressures on their firms to cut spending on IT solutions and to confine these to activities in which the applications of IT resulted in demonstrable gains in competitiveness; on the other, the recessionary conditions also intensified the pressure on such firms to improve their competitiveness by availing of the unique combination that India offers — that of high talent, low costs and ever-improving infrastructure.

For the same reasons, what effects will the recent revival of economic activity have? Will it entail higher outlays on IT by western firms, and thereby make them source more from India? Or will it loosen the pressure on them to avail of that unique combination?

Third, of course, is the problem that has arisen precisely because of success: backlash. It is real: protectionist legislation has already been introduced in eight states of the US; there is also a move to introduce a ‘‘Buy American Act’’ at the Federal level. Unions in the UK, in Australia have begun agitations against outsourcing functions to India. Moves of this kind are liable to be stoked even more in the coming months. In our principal market — the US — 2004 is an election year: the president and vice-president are up for re-election, so are one-third of the senators and the entire House of Representatives.

Of course, there has already been a major shift of jobs to China in manufacturing, but that does not make this new shift of services any easier. On the contrary, the sentiment is the opposite — ‘‘We lost millions of jobs to China, are we now going to lose more millions to India?’’ The media both reflects and feeds this sentiment: when a firm in the US expands its operations and decides to locate an R&D centre in India, the headline reads, ‘‘Oracle moving 2,000 jobs to India’’.

Moreover, the ones who are getting affected by outsourcing are the more vocal lot — the white collar workers. Many of them are college or high school drop outs: they have little prospect of finding jobs outside operations like call centres. And the location of functions in India this time has occurred during recessionary conditions — quite the opposite set of conditions during which American manufacturing firms set up their establishments in China.

For the past year there have been signs of a recovery — but till the past month the data that was coming out was being used by critics of outsourcing to point out that what was taking place was a ‘‘jobless recovery’’. The result is portrayed in a Forrester study: of every 100 IT workers who have been displaced only 65 have been able to get re-employed; that 50 per cent of those who got re-employed had to accept jobs at lower earnings. So there is a ready, disgruntled constituency for the politician to exploit, and this is an election year.

Economic trends apart, there is a structural feature of the IT industry that makes for possible difficulties. While IT registered the most conspicuous growth in the US, UK, etc, trade unions were not able to establish themselves in the industry. These organisations feel that outsourcing is the issue on which they can get IT/ITES professionals to sign up.

And the advantages

There are just as many trends on which we can build. First, as we noticed, India’s telecom infrastructure has improved dramatically over the past five years. It is set for even greater improvements in the coming years. With the laying of fibre optic networks all over the country, a firm in San Jose, California would find it as easy to access services from a firm in any one of 300 cities in India as from its neighbour across the street.

This expansion is being and will be assisted even more by the recent feature of our economic landscape — namely, intense competition among progressive states, each eager to prove itself to be the better investment destination. Bangalore and Hyderabad are not the only cities that are competing today. Gurgaon, Noida, Kolkata, Pune, Mumbai, Cochin are each trying to woo IT firms. Mangalore, Mysore, and half a dozen others have begun taking the first steps too, and have already begun registering successes.

Second, firms abroad have become accustomed to outsourcing — doing so has become part of the business model of more and more companies. Mckinsey interviewed 50 Fortune CIOs a few months ago. None of them reported outsourcing more than 15 per cent of the firm’s IT budget to India. But when asked what their plans were for the coming years, 70 per cent reported they would be outsourcing more than 15 per cent to India.

The figures at the other end of the scale were the direct opposite: 73 per cent reported they were outsourcing less than five per cent to India; that figure was down to two per cent when the CIOs were asked about what they planned to be doing in the near future.

Because of my current position, every week representatives of some IT giant or the other come to call on me. One of them after another reports how his firm is doubling and quadrupling staff in its Indian offices: Intel, Microsoft, SAP, Oracle ... Indeed, we hear less than is in fact happening — these days firms that are expanding operations in India forgo the customary launch festivities lest these become occasions for unions back home to ignite scares.

Third, apart from the advantage that flows from Indian IT professionals having proven their capabilities already, the unique advantage that they have had vis a vis their competitors in China and east Europe is certain to weigh in their favour for quite some time. Firms in China, Vietnam, east Europe can write software, no doubt. Their professionals will soon learn to do so in English, no doubt.

But Indian firms are able to provide not just software for transforming an operation. They are able to provide complete business solutions — something firms in countries such as China, unfamiliar as they are with reigning financial systems and business practices, will take some years to master.

Fourth, a series of new disciplines is about to break out in India for which IT will be what arithmetic is to calculation. Biotechnology, nanotechnology, telemedicine, telesurgery, distance learning, products with embedded software, automated production processes, product design — and many more. Each of these will see a leap in the coming years in India, and in each of them IT will be a basic ingredient.

Finally, we are at the threshold of breaking out of a handicap that has hobbled us thus far: scale. Why is it that a firm like Nokia produces handsets in China but not in India? There are several reasons, of course, but among these is the question of scale: the demand for new handsets has been so much greater in China — at that scale, the firm reaps many economies.

Now that two million new telecom subscribers are being added every month, India too becomes a place that is attractive enough for a potential manufacturer to locate his facilities here. The same will soon be true for products that are used for IT and IT-enabled services.

What should we be doing to build on these advantages?
http://www.indianexpress.com/full_story....t_id=38409

[Guest]

http://www.indianexpress.com/full_story....t_id=38528
PART II

<b>Indian infotech needs to partner east Europe, target China
ENSURING IT REMAINS INDIAN TERRITORY </b>
<i>ARUN SHOURIE </i>

First and foremost we have to remember that in today’s world no one can afford to rest even for a moment. Especially not in a sector in which technological and other forms of change are as swift as they are in information technology. Recall what happened in Silicon Valley — in a moment so many stars shot off the sky. Recall that the other day Ireland was one of our main competitors in software; it still is today, but it is also a country firms like Wipro now view as a potential market.

Next, the one way to counter the backlash that is welling up is to provide services of such quality, at such cost that the firms in US, Europe etc, that use them become lobbyists for us. They should be telling their contacts in those governments and legislatures that they will be rendered uncompetitive if they are prevented from accessing India.

That is what happened in manufacturing vis a vis China: American firms that had invested in China, American firms that were importing from and exporting to China are the ones that worked overtime to ensure sanctions were not imposed on that country in the wake of Tiananmen, with the severity many were urging.

Third, we must go on diversifying our markets. The figure we encountered earlier — that the US accounts for 60 per cent of our IT exports — is not something that should by itself discourage us: perhaps the US accounts for some similar proportion of the use of IT as a whole. But it should caution us. Germany and Japan are the obvious markets we should target: Germany’s IT market is worth $ 66 to 70 billion; our IT exports to Germany are only $ 250 million — that is, if you accept our figures; they are just $ 50-55 million if you go by German figures.

And as countries like Cyprus, Bulgaria and others join the European Union, forming strategic alliances with their companies, even setting up subsidiaries there can help us vault over such tariff or non-tariff barriers that may be set up in the coming years. They have strengths — for instance, in mathematics. We have strengths from which they can gain — for instance, entrepreneurial skills as well as good knowledge of the markets that have to be targeted.

‘‘And frankly,’’ says an Indian IT executive who has long worked in Europe and knows it well, ‘‘there is racialism. Mounting a campaign, ‘Our jobs are being taken away by Indians’ is easy. Mounting a campaign, ‘East Europeans are stealing our jobs’ will be difficult. Others within Europe will muffle those voices.’’ So, alliances with those who will be joining the EU. And there is no time to lose — some of them join from the coming May.

One other potential market is the host of western firms that have set up operations in China. Many of our major software generators supply various kinds of software services and products to their principals outside China: given the fact that they already know the acumen of our firms and professionals, their subsidiaries in China will feel quite comfortable in assigning work to our firms.

Fourth, we can be certain other countries will learn to provide several of the types of services that we have been supplying. And each of them will have advantages of its own. For instance, that we know English has been one of our advantages. Little Mauritius, as its professionals pick up IT, will have an advantage in accessing the French market: Mauritians speak French as their mother tongue.

The Chinese will soon overcome English: and they will do so with the focused pursuit that has become their hallmark — a report said the other day that they had imported 20,000 teachers of English, and that many of them had been deployed in the IT industry; another report said they had decreed that every taxi driver — that should actually read ‘‘even every taxi driver’’ — in Beijing would have to be fluent in English by the time the city hosts the Olympics four years from now.

The lesson is obvious: formidable as our achievements are, as others will start doing what we have been doing, we must continually aim to provide ever more complex IT services and products.

And we can do so. After all, we are among the half a dozen countries that put satellites into space; we are among the few that have manufactured guided missiles; we are among the three or four that have put supercomputers together on their own; we are among the few that have developed nuclear weapons; our scientists have done excellent work in imaging from space.

Each of these tasks has required software of high complexity. Far from sharing the requisite technologies, software etc, other countries have done everything they could to deny them to us. All of the required software and hardware have been devised by our own professionals. So, our scientists and IT companies can.

Indeed, apart from moving to more complex IT products, we should move to integrating the software services we provide with providing complete business solutions. Recall what Indian professionals were able to do to turn the Shinsei Bank around in Japan. There is much that our IT firms can learn from the sort of mutation a firm like IBM is going through. We think of IBM as a company manufacturing computers. The fact is its computers are not ‘‘manufactured’’ at any one site now. What it does by way of hardware is better described as ‘‘assembly’’ — of components produced in many countries.

Even more significant, providing hardware is itself becoming an activity that describes the past of IBM. The Economist reports, ‘‘Big Blue (IBM) expects profits to migrate to software and services, and is managing its product portfolio accordingly. For example, it has sold its hardware drive business and acquired the consulting arm of Pricewaterhouse Coopers, an accountancy firm. Slowly but surely, IBM is morphing from a technology vendor with a strong IT-services arm into a business consulting firm that also sells software and hardware.’’ (The Economist, May 10, 2003, page 18).

We have much to gain by vastly extending the range of non-IT services that are provided via IT. Lawyers and chartered accountants are ever so expensive in the US and Europe. You just have to get our young Graduates of the National Law School to bone up on American or German law, or our accountants to learn the particulars of accounting practices in those countries, and they will provide the high-flying legal and accounting firms there the kind of research and back-up assistance they can’t dream of.

And thanks to the advances in IT and telecom infrastructure, that assistance can be provided in real-time, online. The same goes for medical diagnosis and counselling. And for a host of other specialisations.

But there is a prerequisite. A country cannot go on doing increasingly complex things in thin air. Unless institutions of higher learning maintain standards of excellence, and unless they produce persons of requisite quality in large numbers, the country will not be able to maintain such lead as it has acquired.

F.C. Kohli, one of the pioneers of the IT industry in India, began a presentation the other day with a telling figure. ‘‘A few institutes like IITs together produce about 2,500-3,000 top class first degree engineers. About 2,000 migrate abroad, another 500 opt for business management.’’ You can infer how many will be left at the end of the stream for scholarly work in their disciplines.

The numbers signing up for basic sciences — mathematics, physics, chemistry — has been falling at an alarming rate. Such trends have to be reversed. Many proposals for doing so have been advanced. Among them is the elementary one — of multiplying the sheer number of persons in such disciplines that we turn out: Kohli and his associates conducted a most imaginative analysis of the gap that exists between one of the best institutions in Mumbai and the regional engineering colleges in Maharashtra. And he has devised a concrete —and inexpensive — plan to upgrade the latter so that the number of engineering Graduates can be multiplied ten-fold.

Similarly, the smallest changes in governmental regulations will cause a flood of private investment to come into institutes of higher learning. Why should we have just five IITs? Why should we have only half a dozen IIMs? Why not 50 of each — and each of the standard of the present ones? Reforms in this sphere will repay the government’s efforts a hundred-fold in no time. And unless they are brought about swiftly, India will not attain the leadership we talk about in fields like biotechnology, indeed it will lose the lead it has established in IT also.

Several kinds of steps are being taken to counter the backlash:

l NASSCOM as well as our embassies are working with companies that are locating operations in India, and with their associations. Together they are documenting — to senators, to governors, to their staff — the advantages that have accrued to the US economy, for instance, as a result of the services that Indian IT companies have provided.

A recent study by the Mckinsey Global Institute estimates that every dollar’s worth of labour cost outsourced by US firms creates $ 1.45 to $ 1.47 worth of wealth worldwide. A full $ 1.12 to $ 1.14 — that is, 75 to 80 per cent — of this comes back to the US: not just in reduced costs — Mckinsey estimates that costs get reduced by 45-55 per cent of initial costs of the operation, by 65-70 per cent once the business processes too are re-engineered; not only in increased revenue — because of the huge reduction in costs, American firms can now go after unpaid amounts that were earlier too small to pursue; on top of all this, the off-shoring provides orders for US firms — a call centre is set up in India, telecom equipment for it comes from ...

l We have to redouble coordination with countries that have as much interest in accessing western markets as us — including many that are competing with us for this space: China, Mexico, Brazil, South Africa. As happened at Cancun, together we have to convince the developed countries that we will not open our markets for goods if protectionist walls are put up to block services.

There are other things to which we must pay special attention lest we give a handle to those who are campaigning against outsourcing. An American expert well versed in IT trends in the US, and one sympathetic to India, illustrated this by what he told me the other day. ‘‘You are just one privacy incident away from disaster,’’ he said, pointing to the urgent need for our firms to ensure that the data they receive, the processed data they send back is completely secure.

He pointed to a chilling instance: a firm used to get medical data transcripted by qualified persons in prisons: one of the persons handling the data threatened to use it in an unauthorised way, and that was the end of the arrangement.

What should governments be doing to help the IT industry grow even faster?

[Guest]

Folks, please post links. Thanks!

[Guest]

<!--QuoteBegin-Krishna+Jan 4 2004, 12:28 PM-->QUOTE(Krishna @ Jan 4 2004, 12:28 PM)<!--QuoteEBegin--> Folks, please post links. Thanks! <!--QuoteEnd--><!--QuoteEEnd-->

Krishna,

Mudy has given links to the last two articles by Arun Shourie. If you are referring to the previous Three Articles - Middle August 2003- in the Indian Express then here goes :

<b>BEFORE THE WHINING DROWNS IT OUT, LISTEN TO THE NEW INDIA</b>

<b>WHEN SKY IS THE LIMIT</b>

<b>THIS IS INDIA’S MOMENT BUT IT’S ONLY A MOMENT, CAN WE GRASP IT?</b>

Trust these are the ones you want.

Cheers

[Guest]

<!--QuoteBegin-Peregrine+Jan 4 2004, 02:12 PM-->QUOTE(Peregrine @ Jan 4 2004, 02:12 PM)<!--QuoteEBegin-->
Krishna,

Mudy has given links to the last two articles by Arun Shourie.<!--QuoteEnd--><!--QuoteEEnd-->
Thanks Peregrine!

BTW. There were no links, initially, when I made that post.

[Guest]

<!--QuoteBegin-Krishna+Jan 5 2004, 04:31 AM-->QUOTE(Krishna @ Jan 5 2004, 04:31 AM)<!--QuoteEBegin-->

BTW. There were no links, initially, when I made that post. <!--QuoteEnd--><!--QuoteEEnd-->

<b>Krishna :</b>

OOps

Mistook Took Place

Sorry

Cheers

[muddur]

Shourie attributes economic growth to PM’s leadership
NT Staff Reporter

http://www.navhindtimes.com/stories.php?pa...Story_ID=010611


Panaji, Jan 5: The Union Minister for Disinvestments, Mr Arun Shourie claimed that the ‘feel-good factor’ of the Indian economy was due to the splendid achievements of the BJP-led government at the Centre.

On mission to encourage the party workers in Goa ahead of parliamentary elections, Mr Shourie attributed the resurgent economy, booming foreign exchange and the country’s enhanced stature in the world on all fronts to the visionary leadership of the Prime Minister, Mr Atal Behari Vajpayee.

Mr Shourie belittled the Congress as “a lost cow” and questioned whether its president, Ms Sonia Gandhi had the “maturity, dedication and perseverance to lead the nation like Mr Vajpayee.”

He was addressing a workers’ meeting of the Bharatiya Janata Party at the Menezes Braganza hall today evening in the presence of the Chief Minister, Mr Manohar Parrikar, his cabinet colleagues, Member of Parliament, Mr Ramakant Angle and senior party functionaries.

The programme was part of the 15-day “Vijay Vikas Sankalp Parv” organised by the BJP to celebrate the party’s achievements in governance as well as the recent victories in assembly elections in three states in North India.

“Now the world’s perception of India has changed in all spheres. Our perception of India has also changed in that we are confident of competing with the world,” Mr Shourie said.

Mr Shourie rattled off figure after exponential figure to substantiate the “feel-good factor” which he attributed to his government’s rule. He said food in the government godowns had increased to more than 60 million tonne, exports had grown to 13 billion dollars per year, foreign companies like Mercedes Benz and Nokia were having their component and software design done in India and that India’s exports with China were a billion dollars more than its imports.

Mr Shourie, who is also the Telecommunications Minister, said 20 lakh subscribers were taking new mobile or landline connections every month and that the rate had dropped to 80 paise per minute.

He praised the Prime Minister’s handling of Pakistan, terrorism, the Bodo and ULFA militancy, and referred positively to his disinvestement policies.

“These are revolutionary changes,” Mr Shourie said, adding that “there is perfect harmony between the Centre and states and perfect harmony between the parties at the Centre. There is also perfect co-ordination between the party and the government”. He dismissed the alleged differences between Mr Vajpayee and Mr Advani as “rumours” and said “National interest is first in all our decisions.”

Apparently alluding to elections, Mr Shourie said the BJP had candidates of “integrity, conviction, comprehension and perseverance” to lead India forward.

[Guest]

<b>PART III : IT'S WRITTEN, NOW JUST DOT THE Is, CROSS THE Ts</b>

<b>ENSURING IT REMAINS IN INDIAN TERRITORY

ARUN SHOURIE</b>

The phenomenal success in IT is the result primarily of the enterprise and innovativeness of our entrepreneurs and young professionals, and of private firms that have spread computer literacy to millions. Government initiatives and incentives have also played a major role. By count there are almost three dozen fiscal incentives the Government has given to the software industry — the very ones the industry itself has urged would help it the most.

Similarly, the Government has set up 39 software parks. In these, IT firms get all the infrastructure and services they require at one go. About 3,500 firms operating from these parks export Rs 37,000 crore worth of IT products and services — that is, about 80 per cent of IT exports.

In a word, the sector is a model of government-private partnership. Some of the things the Government has to do in the coming months are implicit in the foregoing — for instance, our embassies and chanceries in the US and Europe must continue to work together with NASSCOM and other organisations to staunch the backlash.

The Government has to continue to, and is continuing to, improve the infrastructure the industry requires. Work along other coordinates is also proceeding apace. Attitudes too have changed: government personnel do realise their task is to enable entrepreneurs and technicians to do even better. But every other week I come across some facet that reminds me this is one area in which the governmental structure can be more forthcoming.

•IT professionals do not make much distinction between night and day: in part because they are young, in part because they get seized by the problem on which they are working, in part because when at night they are home it is day for their client in, say, the US.

Each time I go to Bangalore, they tell me that to attend to a conference call from their client at night they have to go back to their office. The telecom people say they do not connect company-leased lines to the telecom network as this becomes the channel for illegal, grey traffic. But can we not work out some arrangement for these world-class firms? I ask. Negotiations are still on!

• Clients from Europe are loath to spend extra hours, sometimes a day changing flights in Mumbai, to get to Bangalore; they require daily direct flights to Bangalore.

• Firms that operate from multiple locations have complained of problems with local customs officials about soft-bonding of components.

• For persons in this industry, as for many others, a laptop is as much of an accessory as a pen, as a mobile phone. But our regulations require that, each time we go abroad, we have particulars of our laptop stamped on our travel documents.

A while ago, one of the icons of the industry was held up as he did not have the requisite forms. Passengers in the queue behind him had to intervene.

Such examples can be multiplied. Many of them are minor. Governments must attend to them nevertheless — in part because they are irritants; even more so, to convince those who are doing so much for the country that the governmental structure is sensitive to their needs — I would hope, to an extent even to their whims.

<b>Self-denial as policy </b>

That we are assisting someone to do his job often leads to the presumption we are also best equipped to tell him what he should be doing and how! Governments are prone to that temptation even more than we are in our personal lives.

One of the reasons the IT and cable industry have grown so rapidly in India is that governments were, in a sense, not looking — or that the growth and mutation were so rapid that governmental structures were not able to decide what to regulate and restrict.

But now that these sectors are so conspicuous, many see features in them that should be regulated! Many miasmas occur to us — ‘‘What if...? Should we not tighten pass law ‘X’ to prevent possible misuse? Are the employers all they are made out to be? Are you sure some of them are not exploiting the youngsters employed in this sector?...You just don’t see — so many of them have become so arrogant. They just have to be brought down a peg or two...’’

I have been accosted with each of these questions. An example in the public domain will illustrate the apprehension.

The other day newspapers reported a proposal to extend provisions of the Contract Labour Act to the IT industry. The consequences will be apparent from an analogous case.

In the film industry producers do not keep stars and technicians on their payrolls as permanent staff. A film is conceived. A writer writes up the script. Some songster has some songs he has already composed, or conjures up some new ones. Actors, actresses, film crew, sound personnel, film editors come together — each on a contract.

The moment the task is finished, they disperse — only to re-form in some other constellation for some other film.

Much of the IT industry is of the same nature — as and when tasks are secured, professionals are brought together, and they disperse when the job is done.

The industry is also very prone to cycles. This is all the more so in the case of small firms. Even a modest-sized job for them requires a major enlargement of their personnel. Asking the firms to keep this staff on after the job has been done will be the surest way to kill them.

And such laws never work. Look at the result of the Working Journalists Act and the successive ‘‘Wage Boards’’ that have been set up in the newspaper industry. It is well known that the overwhelming majority of newspapers just do not implement the Awards of the Boards.

Not just that. As governments, not wanting to fall afoul of journalists, started making noises about prosecuting papers that were not implementing the Awards, the papers induced, some would say compelled, the journalists to opt for signing fixed term-contracts — a practice that put the journalists beyond the purview of those Wage Boards on the one hand, and made them even more nervous of the employer on the other.

Should we subject the IT industry and the professionals in it to sequences such as this? Does the basic rationale of laws such as the Contract Labour Act hold at all for industries like IT? The rationale has always been that workers engaged on contracts — like construction workers — are lowly paid, and therefore there is a need to protect them through legislation. But professionals in the IT industry are among the highest paid in the country.

So, the first rule for governmental intervention should be self-denial. But there also are things governments should be doing.

<b>Sustaining innovation </b>

My young friend Vedanta Jhaver, who runs an up and coming IT firm, Prodapt, out of Chennai and San Francisco, reminds me of two areas in which governments need to do more. He points out that the largest 20 companies — they constitute 0.6 per cent of the number of companies in the industry — account for almost 60 per cent of the industry’s revenues. The per cent contribution of small- and medium-sized companies has been falling in the past five-six years.

I am not one for reserving things for some segment of industry, nor for propping it up with artificial planks. Cases such as that of small-scale units, of locating units in backward districts, remind us that such assistance almost always backfires: unsustainable units come to be established; they get to be established at unviable locations; in the end governments are neither able to sustain the ‘‘incentives’’ — tax breaks, price and purchase preferences, reservation of products — nor to terminate them.

Nor am I much awed by that 60-per cent figure. In several other industries the figure will be similar. As has been well said, you don’t want to penalise the village cobbler for being the only cobbler in a radius of five miles: the larger firms are big by our standards, but they are small when compared to the ones they have to compete against — the turnover of our entire IT industry is $16 billion; that of a single firm like Microsoft — with just 55,000 employees — is $32 billion, that of IBM is $81 billion.

So I am not for artificial props. But Vedanta draws attention to the sheer size of the target at which we have to aim. We are told our IT exports have to reach around $50 billion by 2008. If the large Indian firms keep growing even by 20 per cent a year, he says, such targets will not be realised unless the small and medium firms in this sector grow by 40-50 per cent a year. At present they are growing at just 10-15 per cent.

My apprehension centres on another point. Innovation often comes from inconspicuous, small units, often from isolated, eccentric individuals. Our structures — for instance, our banks and financial institutions — are not attuned to nurturing and supporting such firms and individuals.

The collapse of so many tiny IT units three/four years ago has made bankers all the more wary of extending help to such firms and individuals. But the consequence is even the more robust units are now fighting for survival.

Vedanta Jhaver points out that, ‘‘Very few SME software services companies receive bank limits, and if they are lucky to have one, the interest rates are almost always above 16 per cent. The (IT) services sector is viewed by the banking industry as ‘high risk’ and the latter requires collaterals of 100 per cent for even small bank limits.’’

The Government is encouraging financial institutions to support such a high-risk industry as films — and for good reason: in part to cut the hold of the underworld. The small and medium IT units deserve similar attention — for at least two reasons.

First, as mentioned above, this is the lot that is liable to contribute many innovations. The other reason is one all who remember their Ibn Khaldun would recognise! In the Muqadimah, that perceptive seer taught dynasties lose their vigour by the third generation. Firms — even very powerful ones — go up and down at a much faster pace.

As this is a young industry, the great pioneers who have set up the principal firms in India are still directing them. A few years from now they will be handing over to others. Will the firms sustain their dynamism and resilience when that happens?

In any event, it is always dangerous to rely on only a few — all sorts of meteors can strike even the best. That is all the more so in spheres where change is at lightning speed. Sheer prudence, therefore, dictates that the country nurture hosts of innovative firms — so that they can take over should some of the leaders flag, as wave merges into and takes over from wave.

A host of small things can be done to help them along. For instance, certifications by recognised authorities are vital: potential customers require assurance of excellence, and most often do not have the time to evaluate on their own the worth of a group of professionals.

Governmental help takes the form of assisting SMEs to ramp up their facilities and standards to, say, CMM Quality level V. The Government could set up a body for these firms to parallel R.A. Mashelkar’s National Innovation Foundation. It could set up an incubation-cum-innovation fund.

It could prod banks and financial institutions to be more forthcoming in assisting SMEs in this sector. It could initiate some pooling of risks by them as insurance firms do in regard to extraordinary events. Could it spur a special effort by the major purchasers — IOC, ONGC, BSNL, MTNL — to reach beyond the half a dozen established vendors?

Are the latter really better at designing billing systems, say, or are they better at persuading these major clients that they are better? At least in Telecom and Posts, I have seen software and hardware supplied by the best known vendors even for standard tasks — BSNL’s billing in north India, MTNL’s Dolphin and Garuda services, elementary operations of the Postal Department — to go woefully wrong so often that I am convinced the mere fact the task has been handed over to some big name is little guarantee it will get done.

Thus: severe penalties in contracts on the one hand and looking beyond the established names on the other.

<b>The Inter-operability Imperative </b>

There is another area that deserves attention of our governments. Indeed, it concerns what governments are themselves doing in this sector. Several departments of central and state governments are installing software for a variety of operations.

And there have been notable improvements as a result: 80 per cent of the forms of the Directorate General of Foreign Trade, accounting for 90 per cent of total value, for instance, are now filed online; as a result, the processing time of these, which used to be 45 days, has come down to six hours.

Now software is obtained by departments and governments from varied sources — often the choice is determined by no more than the fact that some provider is the lowest bidder in a tender! But the systems must be inter-operable.

In the US when, in the wake of 9/11, terrorists and their financial transactions and those of their front organisations had to be tracked down, one of the problems was the systems of different agencies of the Government — FBI, Internal Revenue, Immigration and Naturalisation Service — could not ‘‘talk’’ to each other. The systems being installed in our departments are also stand alone systems. To take a simple instance, systems housing data relating to passports, visas, immigration and applications for them cannot at present communicate with each other.

In the US, in the UK, in Germany, governments are having to spend billions to make their systems inter-operable. In a sense, we have the advantage — such systems are just being installed. Ensuring inter-operability at this stage will be much less expensive than vaulting over the silos will be five to 10 years from now.

Therefore, ensuring inter-operability — at least of the critical systems — should be one of the priorities in the coming year.

Cheers

[Guest]

<b>PART IV : IT NEEDS DEMAND, INDIA DEMANDS IT</b>

<b>ENSURING IT REMAINS INDIAN TERRITORY

ARUN SHOURIE</b>

We have done exceedingly well in software. Incentives given by the government have helped. The 39 Software Technology Parks that it created, and in which information technology firms could get world-class facilities under one roof, have been decisive: 80 per cent of IT exports originate from units operating out of these 39 parks. The task is to now replicate this kind of success in the hardware sector.

For that we have to go many miles farther than we would have had to a decade ago — when some of the companies came to set up their production facilities here, and we turned our noses up. For by now they have already established their factories in China, Malaysia etc. Why should they not expand those operations, why should they not set up their next factory in those countries rather than pick up their bags and come to India? They will do so only if what we have to offer them is decidedly better than what they actually have in their present locations.

That is a lesson we still have not learnt. The other day the lead story running across the front page of Business Line was ‘‘Trade unions setting their sights on IT sector’’. The familiar litany: ‘‘anarchy’’; ‘‘the conditions are worse than the exploitation seen in villages’’; labour laws are being violated; ‘‘feelings of insecurity, humiliation’’ ...

Should the unionists succeed, all that will happen is that firms in Europe and the US that are outsourcing to India, firms that are setting up R&D centres here, will conclude that locations in India cannot be relied upon for uninterrupted work.

Take the simplest example. Women are not to work at night, many activists insist. But a call centre for the US must function when that country is awake — that is, during the Indian night. A union demanding that such operations be outlawed will only be, to use the phrase much-favoured by Lenin, ‘‘objectively’’ serving the interests of those in the US, UK etc. who are out to block outsourcing to India.

Nor is it just a question of enforcing one demand. Even more important is the general atmosphere of the sector, the penumbra around an investment destination. And a reputation once acquired lasts long after the reality has changed. West Bengal today is a fairly peaceful place in which to operate a factory. But the reputation that it acquired because of militant trade unionism in the 1960s and 1970s keeps investors away till this day.

Ironically, the way out has been shown by none other than the government of West Bengal. While CPI(M) representatives in Delhi have been shouting about the right to strike being a fundamental right, of it being the bulwark of democracy itself, the CPI(M) government in West Bengal has notified information technology to be a ‘‘public utility’’ — thus putting it beyond the mischief of strikes and bandhs.

The general reputation is thus all-important. But it is not enough. The individuals who are going to make the crucial decisions have to be convinced — ‘‘one by one, little by little, again and again’’. So we have to orchestrate board-room presentations to this handful.

And this is best done by entrepreneurs and not by ministers and civil servants. The latter cannot carry the conviction that the entrepreneur who is actually operating a successful manufacturing facility in India can. This is exactly the sort of team we are organising in the Ministry of Information Technology.


<b>Creating domestic demand for IT </b>

Eighty-five per cent of India’s IT industry, as we saw, is for exports. Observers often contrast this with China: there the position is the exact opposite — 85 per cent of its turnover is for the domestic market. This is doubly undesirable, they say — on the one hand, we are not availing of advantages that would accrue were we to introduce IT in our lives and operations in a big way; and, on the other, our IT industry remains at the mercy of fluctuations in economies abroad.

I am with them up to this point, but not with the inference they draw from these figures, namely that, ‘‘The main demand has to come from government. Government should take the lead and redouble its plans to introduce e-governance.’’

There already is an instruction to ministries that they must earmark three per cent of their budget for modernising their operations by inducting information technology. I am not much for such earmarking — comparable figures can be cited for other sectors: ‘‘In developed countries x per cent is spent on R&D, in India it is only x minus y per cent ... In developed countries x per cent is spent on health ... on education, in India it is only x minus y per cent ...’’

But one should avoid putting a sector on artificial respirators. One should especially avoid habituating a sector that has shown such inventiveness and resilience as our IT industry to respirators. The way to develop a large domestic IT market is for the industry to come up with solutions and products that meet real needs.

Many of the problems that some of our manufacturing firms have faced have arisen because they proceeded the easy way: a product has made good in some developed country; get the firm abroad to sign a collaboration agreement to produce that item with the technology that the firm has used abroad.

The danger is particularly acute in spheres such as IT in which technologies change in a blink, in which what technology will make possible tomorrow is far beyond what we can imagine today.

In such spheres there is often the temptation of plenty. Everything seems worth doing. Someone in government or in a firm hears of something that has been done somewhere — sometimes he even thinks up some bright application! As he is in high office or has resources, work on that idea commences. Substantial sums are spent developing and then installing that application.

But when after a few years it is seen that such pursuits did not yield any concrete benefit to people, the applications discredit the new technologies, they compound cynicism.

Therefore, ‘‘Fewer but better’’ — another phrase much favoured by Lenin! That is the strategy the government has adopted for the coming year after a presentation to the prime minister.

For the same reason, outside government also, we should address specific, and urgent needs of our people.


•One can think up many fancy applications for e-governance, for instance. A few hundred applications have been developed and adopted in different parts of the country. Some of them are scarcely used after being developed and installed. Others have already made a perceptible difference.

The Bhoomi project in Karnataka, under which all land records have been digitised is an example — the farmer can secure the title documents etc. he needs for selling or buying property, for raising a loan without having to wait upon the patwari.


• We cannot hope to provide in the foreseeable future continuous Internet connectivity to persons in remote settlements. Our ministry has therefore provided a grant to IIT Delhi to develop technology for an innovative solution: a kiosk in that remote village can be set up to provide a series of services — birth and death certificates, title documents etc.; e-mail messages too can be keyed in from the kiosk; an antenna is affixed to a bus and a processing unit is installed in it; when the bus passes near that area, it electronically delivers the documents that have been sought, the e-mails that have arrived and it collects the e-mails and requests that have been fed in at the kiosk.

• Similarly, by installing tele-medicine infrastructure and software, the Apollo Hospital chain has enabled patients in distant, isolated communities — in Nagaland — to receive the best medical diagnosis and advice from any of its 27 hospitals. At those hospitals, the best specialists take turns to be available for providing advice.

• Eighteen languages are recognised as official languages under the Constitution. To enable people to access these new technologies, software has been developed by C-DAC that transforms text — and will soon convert speech — automatically from one language to another. This software is now being developed for mobile phones — so that you can send your e-mail in English; your friend, who would rather receive it in Hindi, will receive it in that language.

• The script of Indian languages is phonetic. That of English is not. Therefore, software — Shakti — has been developed by an IIT Chennai based group by which, while I type on a standard English keyboard, the computer transcribes and prints the text in the script of the Indian language.

• Incidentally, Shakti illustrates the potential in other ways too. Its office suite does all the things that the office suite of the dominant company does. It does more — by a mere click you can have the toolbars etc. turn from English to Indian languages. The suite of that foreign major costs Rs 25,000 a piece. Shakti provides the equivalent for Rs 1,800!

• Many of us cannot read print — either because we are visually impaired or because we are illiterate. WEBEL in Kolkata has developed software that scans a page, transforms it into electronic text, and prints it out in Braille.

C-DAC in Pune has gone one step further. It has developed software that transforms text into speech. This has already been done for anything available in electronic form — for instance, a person who is blind can by just a click or two get to his favourite newspaper on the Internet, or someone can reach that for him, and the computer reads out the paper to him.

• Similarly, one of the doyens of the IT industry in India, F.C. Kohli, has developed methods for making people literate using IT. The methods are bound to spell a revolution. Even the illiterate adult knows language; he has picked it up as he has grown. What many of them do not know is how to recognise in print the word they know.

The conventional method of instruction has been to teach such a person to read by first getting him to learn the alphabet. But the method that has been used extensively for handicapped children is different: it exposes her or him to the word as a whole, almost as an icon; simultaneously, the person hears the sound and sees a depiction of what the word connotes.

Instead of learning ‘‘umbrella’’ by learning ‘‘u’’, then ‘‘m’’ etc. the person is shown the entire word. Simultaneously, the computer pronounces the word. And shows him a picture of what an umbrella does.

Through this ‘‘total immersion’’, and capitalising on the fact that a vocabulary of just 500 to 700 words is sufficient for reading the average, daily newspaper, almost 40,000 persons who were totally but totally illiterate have, in Kohli’s experiment, been brought to a level that they can now read newspapers on their own. This has been done through instruction of just an hour to an hour and a half a day for just 10 weeks.

The advantages of the approach are obvious. The shortage of teachers has been overcome. The person is able to choose the time at which she can come to the place for learning. ‘‘Literacy’’ in this experiment means not our conventional definition — someone who can sign his name; but one who can read a newspaper unaided.

Kohli estimates that 300 to 400 people can be made literate with one computer in a year. If only we are allowed to import a million second-hand computers, he says, we can wipe out illiteracy from the country in little time. And he is the sort of person who can actually get the IBMs and others to donate those million computers free!

Such examples can be multiplied. The point is that even as, and specially because, the new technologies make so many things seem attractive, we should sharpen our focus, and concentrate efforts on those projects that will spell immediate benefits to vast numbers, and which will lift them into a more enabled world. Demand for IT will follow as a matter of course.

And there are avenues upon avenues in which applications of IT will pay rich dividends for the country:

• Embedded software, specially in defence;

• Major outlays on weapons are inevitable;

• These weapons will be increasingly sophisticated — guidance systems, sensors, timers, robots, imaging from space: the list is endless, and each item in it requires IT inputs;

• No one is going to give us the relevant technologies — hence this huge market is a virtual preserve for Indian researchers and industry.

• National security: several countries, in particular China, are working on ways by which progressively integrated economies and systems can be disabled using IT. To forestall such attacks we have to develop firewalls, sophisticated encryption methods, the ability to track down attacks .

•Product design — for example, two-thirds of the components used by Daimler-Chrysler are being designed in India. This is a field in which the combination of expertise, cost and infrastructure that India can deploy gives it a unique advantage.

• IT in combination with other disciplines — biotechnology, drug discovery, robotics, optics.

• IT used to deliver other services — in addition to software and call centres, we should use it to deliver research and advice in law, accountancy, medical diagnosis and prescription, architecture, risk analysis for banks, analysing claims for insurance companies .

One final point. In many of our research organisations research is going on — and on. We should take up a few projects in what the president calls ‘‘mission mode’’ and bring them to a swift conclusion. The four that occur to me are:

• Use ICT to abolish illiteracy;

• Develop the Universal Networking Language — so that a person can put his data or message onto the Net in any of our 18 languages, the machine should translate it into the Universal Networking Language, and his friend in another state should be able to receive it in his own language;

• Bring text-to-voice and voice-to-text software to perfection so that worlds from which they are today shut out are opened to the print disabled;

•Today one of the severest impediments to enabling people to avail the benefits of the new technologies is the expense of laying the infrastructure to their doorstep; we should complete research that would enable wireless signals to go to a multiple of the 50/60 km they traverse at present.

Each of these is a do-able task.

Each of these will spell untold benefit to millions.

Together, they are worthy of India, they will make India a beacon for the world — in this field, of course, but also in compassion for the handicapped and the distant.

Cheers

[Guest]

Please go through the rebuttal to this series of articles on our WebSite
<!--emo&:argue--><img src='style_emoticons/<#EMO_DIR#>/argue.gif' border='0' style='vertical-align:middle' alt='argue.gif' /><!--endemo--> An Eye Opener to Indians

Srinivas

[Guest]

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Please go through the rebuttal to this series of articles on our WebSite
An Eye Opener to Indians

Srinivas <!--QuoteEnd--><!--QuoteEEnd-->
I know one thing, quality of life of average Indians are improving, which is visible.
Average age of Indians have increased, morality rate, pre-natal help have improved. Indians are not straving. Food is in surplus, no need to stand on line for hours to buy Ghee or sugar (Which i can easily recall).
Some short fall, that will change, one can't make changes in one day.
Now people are worried about quality of bottle water, when 15 years back i myself was hospitalized for days because of contaminated tap water in home. Things have change. Except it. And get ready for more challenges ahead but don't discount what is already achieved.

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->We do have foreign exchange reserves of $ 82 billion dollars but we also borrowed $ 90 billion dollars for infrastructure projects.  More over with the US economy sliding and dollar falling, a ten percent decline in US dollar price will wipe out the purchasing power of $ 8.2 billions for our dollar reserves<!--QuoteEnd--><!--QuoteEEnd-->
$90 billion dollars for infrastructure will save more in long run. Better infrastucture will save transportation cost , saving time, petrol, environment, reliabilty and quality of life. These are very important and can't be discounted.
We needed better infrastructer decades back, atleast applaud what we will get, even late than never.
We have to come out of Leftist mentality. It is a complete failed theory. need to be RIP soon.

[Guest]

LEFTIST .... A BEAUTIFIED TERM GIVEN BY WESTERNERS THOSE GEO POLITICAL LEADERS , TO MANIPULATE AND NEUTRALIZE THE TRUTH....

HAH.... WHEN WILL WE COME TO REALIZE THE POTENTIAL LONG TERM PENETRATION STRATEGY BEING USED ON US......WE INDIANS

[Guest]

Srinivas Duddu,
Don't pity on Indians, they are smart and awaken.
Leftist should learn from Russia and east europe. And stay away from India for good.
This is India's century.

[Guest]

<!--QuoteBegin-Srinivas Duddu+Jan 10 2004, 01:22 AM-->QUOTE(Srinivas Duddu @ Jan 10 2004, 01:22 AM)<!--QuoteEBegin--> Please go through the rebuttal to this series of articles on our WebSite
  <!--emo&:argue--><img src='style_emoticons/<#EMO_DIR#>/argue.gif' border='0' style='vertical-align:middle' alt='argue.gif' /><!--endemo--> An Eye Opener to Indians

Srinivas <!--QuoteEnd--><!--QuoteEEnd-->
I could barely keep my eyes open while reading this "Eye opener" .Why isn't there a name of the author ,is it because he/she is too shy to own up this load of carp.

[Guest]

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->HAH.... WHEN WILL WE COME TO REALIZE THE POTENTIAL LONG TERM PENETRATION STRATEGY BEING USED ON US......WE INDIANS<!--QuoteEnd--><!--QuoteEEnd-->

care to explain what "LONG TERM PENETRATION STRATEGY BEING USED" is??

[Guest]

<!--QuoteBegin-Srinivas Duddu+Jan 10 2004, 01:22 AM-->QUOTE(Srinivas Duddu @ Jan 10 2004, 01:22 AM)<!--QuoteEBegin--> Please go through the rebuttal to this series of articles on our WebSite
  <!--emo&:argue--><img src='style_emoticons/<#EMO_DIR#>/argue.gif' border='0' style='vertical-align:middle' alt='argue.gif' /><!--endemo--> An Eye Opener to Indians

Srinivas <!--QuoteEnd--><!--QuoteEEnd-->
Srinivas,
<i><b>The threat never came from batteries but it came from the house hold electrical meters. In the case of Andhra Pradesh alone $ 120 million dollars worth of electrical meter contract was awarded to Chinese companies with an apparent threat of preventing the IMF next release of loan at the cost Delhi based Indian manufacturer at twice a price than the domestic manufacturer with foreign exchange drain on the country. </b>
Only this much you have to whine about?.....i can tell you 100000000 of examples of wastage of public money in India by some silly politicians.But then what is your point?....will your whining change it? <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/tongue.gif' border='0' style='vertical-align:middle' alt='tongue.gif' /><!--endemo--> </i>


<b><i>We do have foreign exchange reserves of $ 82 billion dollars but we also borrowed $ 90 billion dollars for infrastructure projects. More over with the US economy sliding and dollar falling, a ten percent decline in US dollar price will wipe out the purchasing power of $ 8.2 billions for our dollar reserves. </b>
yes,with dollar falling that will wipe out the 82 billion dollar advantage.But how you did not mentioned that with appreciating RUPEE and falling DOLLAHHH it will be easier and CHEAPER to pay up 90 BILIION DEBT ??? <!--emo&:o--><img src='style_emoticons/<#EMO_DIR#>/ohmy.gif' border='0' style='vertical-align:middle' alt='ohmy.gif' /><!--endemo--> <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/tongue.gif' border='0' style='vertical-align:middle' alt='tongue.gif' /><!--endemo--> <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/tongue.gif' border='0' style='vertical-align:middle' alt='tongue.gif' /><!--endemo--> <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo-->

And yea, i have read what your website says about takeover of indian media and minds by western MNCs(since they are guarding their HIGH technology close to their core-heart). It has truth.No doubt about it.But see....i was concerned about it when i read it.But now i see that like this :

India has been ruled so 1000s of years...opression..etc.etc...so it has become a habitual thing for indians now....lets see how western MNCs do it...we will see another elevated people taking birth on this land to save us from it if there be such situation arises.....

arre bhai kuch to sharam kar.....wo angrez aaye aur unhe bhagana pada...ab kya irada hai?.....baithke rona hai ki wo kyu chale gaye yaa aage ki bhi sochana hai? <!--emo&:lol:--><img src='style_emoticons/<#EMO_DIR#>/laugh.gif' border='0' style='vertical-align:middle' alt='laugh.gif' /><!--endemo-->

<b> ....so my only point is ...lets have faith yaar...in urself...and lets have it too ourselves.... <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/rolleyes.gif' border='0' style='vertical-align:middle' alt='rolleyes.gif' /><!--endemo--> Graduate </b></i>

[Guest]

<b>We do have foreign exchange reserves of $ 82 billion dollars but we also borrowed $ 90 billion dollars for infrastructure projects. More over with the US economy sliding and dollar falling, a ten percent decline in US dollar price will wipe out the purchasing power of $ 8.2 billions for our dollar reserves. </b>

Are you sure this is true? My understanding is that the ratio of foreign currencies that RBI maintians is a secret. Infact through out most of 2003 when Dollar value was falling the value of our reserves increased because of revaulation of foreign currencies. Which means not only do we hold Dollar but also other currencies. So if Dollar goes down against let's say Euro then our reserves also reflect this fact. Our portion of reserves in DOllars goes down but another portion of reserves that we held in Euro goes up. So When dollars falls by 10% , it does not mean out of 82billion dollars reserve we lose 8.2 billion dollars.

This fact shows how much you know about Foreign exchange reserves India holds. Since you are writing about economics and have zero knowledge about it, I would say better bring good arguments or just shut up.