The changes that have taken place in India over the past five or six years render the country a revelation to those who last paid a visit at the beginning of the decade – the villages thick with television sets and delivery boys running hither and thither with video cassettes that rent for only two to four rupees a time, and everybody who’s anybody and many of those who aren’t owning a video cassette recorder. And the government’s long-cherished dream of turning the country into a world centre for software development, although still hampered by more liberal but still onerous export regulations, is slowly but surely becoming a reality, with enough progress being made to hold out real hope of making a breakthrough in the early 1990s. Katy Ring reports.
This year is the final year of India’s seventh five year plan, a plan which New Delhi hopes has placed the country in a position to become to software in the 1990 what Taiwan and South Korea have been to hardware in the 1980s. The seventh plan has seen a five-fold growth in the value of electronics output, which has increased to $4.1m in 1987-88 from a figure of $1.6m in 1984-85, growing at a rate of around 37%. It is, however, in the realm of software export that India has achieved the greatest progress by rising to $54m in 1987 from $22m in 1984 with a target of $250m being set for the year 1989-90. Under the aegis of the Department of Electronics’ Software Development Division many software development activities are currently being carried out in order to maintain India’s success in exporting software. Cheaper than Korea For example, four Computer Aided Development centres have been opened to cater for chemical engineering real-time process control, manufacturing and the electronic industries. A project has also been launched, entitled the Knowledge Based Computer System Development Programme, to gain expertise in the Expert Systems area. To provide the number of computer professionals needed for such research and development the government has set up the Programme of Generation of Manpower for Computers offering computer courses at nearly 250 institutions. In 1988 India trained 8,000 people in information technology, a number which the government claims will have risen by 25% to 10,000 in 1990. Indeed, according to a report by the SRI International, India has the world’s third largest pool of university-trained science and technology personnel of which the top 2% are comparable to the best available anywhere. Furthermore, wages in India are substantially lower than comparable wages paid in the US, Singapore or South Korea. Aside from the attraction of Indian labour, export operations are also being developed in other ways. Firstly, software technology parks are being set up in Pune still better known as Poona, where ICL’s Indian affiliate International Computers Indian Manufacture Pte has its base Bhubaneswar, and Bangalore for software development through satellite links, catering for the export market. Indeed, Texas Instruments Inc has already established this type of park down in Bangalore.
Secondly, the Indian government’s Department of Electronics and the Office of International Trade & Investments for the state of Massachusetts have signed an agreement to create a planning study for an Indo-American Software Trade Network. Thirdly, software development plants catering for export may be established in the country’s various export processing zones which offer companies located there a five year tax holiday, and a zero per cent customs duty on import of capital goods, raw materials and components. Finally, there is a scheme on offer called 100% Export Units which enables an exporter to set up a software development operation anywhere in India, and to import computer systems and other inputs at zero per cent customs duty with special customs bonding. Furthermore, to address the lack of risk capital, India recently established a Venture Capital Fund to be administered by the Industrial Development Bank of India with funds raised from a 5% levy on all remittances for
obtaining technical knowledge from abroad. Following these incentives Ashton-Tate Corp, Microsoft Corp, Hewlett-Packard Co and Sun Microsystems Inc have announced plans to establish bases in India. India currently has 360 firms that develop software, an additional 250 that process data and function as consultancy bureaux, and some 20 that are affiliated to large software houses. Two companies, however, dominate the country’s total software exports – Tata Consultancy Services and Tata Unisys Ltd together command 70% of the software export market.
Buses to soap Tata Unisys which, of the two, illustrates the growing foreign interest in India, was established in 1977 as a publicly held company with investments made by the $5,000m Tata Group Indian conglomerate which makes everything from trucks and buses to soap, along with the then Burroughs Corp, and the Indian public. Tata Unisys has manufacturing, marketing, new business and computer consultancy divisions, as well as exclusive franchises with the Computervision arm of Prime Computer Inc, and with Microsoft for marketing their products in India. In the finance and banking area the company has entered into a $2m agreement with the French international bank, Banque Indosuez, to develop software for its information needs. Other main lines of business include the completed development of an interface between a Prime mini and Computervision workstations for an unnamed US car manufacturer, and conversion and support work, development of spoolers, word processors and utilities for the Unix environment. The government hopes that the success of the investments by Unisys and a handful of other US companies will cause India to be seen as an alluring base for software firms in the 1990s.
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