Making India an ICT Powerhouse: The role of Innovation System

1. Making India an ICT Powerhouse:The role of Innovation System K J Joseph Centre for Development Studies Trivandrum, Kerala, India

2. How do we proceed • India’s unmatched ICT credentials • Innovation system and India’s IT development • The weak links

3. India’s unmatched ICT credentials: Some indicators

4. India: Aimed at hardware, gained in software (export $mill)

5. India: Aimed at hardware, gained in software (the trend)

6. IT and the Economy

7. Year IT,Engineering and R&D, Software Products Exports IT-enabled services Exports Domestic sector Total 1999-00 110000 42000 132000 284000 2000-01 162000 70000 198114 430114 2001-02 170000 106000 246250 522250 20002-03 205000 180000 285000 670000 2003-04E 296000 216000 318000 830000 2004-05E 390000 316000 352000 1058000 2005-06E 513000 409000 365000 1287000 *:Does not include employee numbers relating to the hardware sector Quated in:NASSCOM Strategic Review 2006,Page 145 IT and the Economy (Employment)

8. Shift from onsite to offshore

9. Moving up and down the value chain? • Moving up??…. • Increasing presence in SW products & embedded Software • Expanding Supply Base • Growing range of domain expertise and applications • Increasing presence in knowledge processing - • Moving down?? • Higher growth in BPOs & ITEs • Geographical Diversification • Broad based development • High employment intensity

10. Description No. of Firms ISO 9001 330 ISO 9002 23 ISO 9001/9002 345 ISO 9001:2000 72 SEI CMM Level 5 82 SEI CMM Level 2,3,4 41 CMMi Level 5 32 CMMi Level 2,3,4 14 PCMM Level 5 13 PCMM Level 2,3,4 11 Six Sigma 44 Others 41 Total 401 International Quality Accreditations

11. Innovation System and India’s ICT Development

12. Innovation System and India’s IT Development • Institutions • Bhabha Committee of 1963, Electronics Committee 1966 • Department of Electronics (1970) • Electronics Commission 1971 • National Conference -potential of software exports - Manpower and Infrastructure • Setting up of SEEPZ and liberal trade and investment policies

13. Innovation System and India’s IT Development • Computer Policy 1984 • Computer Software Policy (1986) • Further Policy reforms in 1990s including tax exemptions • Setting up of Software Technology Parks • Initiatives by the regional governments • National Taskforce on IT and Software (1998) • Policy Reforms in the Telecom Sector • National Telecom Policy in 1994 • Telecom Regulatory Act of 1997 (TRAI) • New Telecom Policy of March 1999

14. Innovation System and India’s IT Development • Interventions towards developing manpower ICT • Manpower development has been the key component of different S&T policies • But there were certain specific initiatives for the IT and software sector • National Conference - M Tech Program in IITs • Rajaram Committee (1978) – MCA Program and Expansion of Mtech • Early 1980s’ Private sector entry to IT Training • Sampath Committee (1985) More Active role by DoE • DoE accreditation with AICTE

15. Innovation System and India’s IT Development • R&D Capability Building • R&D activity in software at different institutions such as TIFR, IITs, IISc, select universities by DoE • National Centre for Software Technology (NCST), set up in Bombay in 1984, instrumental for development of internet in the country • C-DAC in Advanced Computing • Various ER&DC spread across the country • Patterns of Spatial Agglomeration of IT sector

16. Innovation System and India’s IT Development • Demand creation • Procurement policies and other promotional measures • Railway computerization • Bank automation • Financial support: The role of EXIM bank of India • Venture capital

17. Innovation System and India’s IT Development Firms • Skewed and long tailed distribution • Home grown success with limited role for foreign firms • But in hardware- foreign firms Industry associations • Addressing Software piracy • Projecting India’s Image • Nasscom’s role in getting the visa rules relaxed by the developed countries …..

18. The Weak links

19. Weak/absence of Networks • Networks integrate complementarities in knowledge, capabilities, and specialization • Hardly any interaction between firms • Interaction with other actors like university is at a very low level • BUT

20. 2000 2001 2002 2003 Total 2000-03 Percent Primary 2 2 5 9 7.6 Industry 7 3 9 15 34 28.6 Services of which: 28 18 10 20 76 63.9 Software 23 17 9 18 67 56.3 Total 35 23 21 40 119 100 Strong networking with foreign firms: (outsourcing & mergers) Sectoral Composition of M&As in Indian Companies

21. Demand: weak interface with the domestic market • ICT and Poverty • Large number of projects • But multiplicity of actors • Lack of coordination and • Failure to exploit synergies • Failure to move beyond pilot stage • (role of innovation system not being appreciated)

22. Demand : ICT diffusion

23. Demand: IT investment in the Mfg sector (share in fixed investment)

24. ICT boom and other Sectors:Competition for skilled manpower?

25. In the context of BRICS • ICT solutions addressing southern issues • Unlike earlier GPTs substantial capability exist in the South in case of ICTs • CorDECT Wirless in Local Loop Technology Developed in India by the Indian Institute of Technology Chennai • Hardware innovations, like simputer are highly relevant in addressing the issues of affordability and illiteracy faced by developing countries • The developments in the Free/ Open Source Software (FOSS) • Need for bringing together BRICS to achieve scale and minimize risk • An E-BRICS Framework Agreement???

26. Thank You Very Much