K J Joseph BRICS workshop Rio 25-27 April 07

Making India an ICT Powerhouse:The role of Innovation System

K J JosephCentre for Development Studies

Trivandrum, Kerala, India

K J Joseph BRICS workshop Rio 25-27 April 07

How do we proceed

India’s unmatched ICT credentials

Innovation system and India’s IT development

The weak links

K J Joseph BRICS workshop Rio 25-27 April 07

India’s unmatched ICT credentials: Some indicators

K J Joseph BRICS workshop Rio 25-27 April 07

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

Year Software Share (%)Electronics HardwareShare (%) Total1985-86 27.79 22.01 98.51 77.99 126.31990-91 111.47 21.5 406.97 78.5 518.441995-96 702.55 53.74 604.79 46.26 1307.332000-01 5910.11 85.32 1016.54 14.68 6926.652005-06 23243.24 92.39 1914.41 7.61 25157.66

K J Joseph BRICS workshop Rio 25-27 April 07

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

Share of Software and Hardware in IT Exports

0102030405060708090

100

Year

Software

Hardware

K J Joseph BRICS workshop Rio 25-27 April 07

IT and the Economy

0

5

10

15

20

25

30

35

40

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06E

Year

IT O

utp

ut

0

1

2

3

4

5

6

Sh

are

of

Nat

ion

al G

DP

IT Output

Share of NationalGDP(%)

K J Joseph BRICS workshop Rio 25-27 April 07

IT and the Economy (Employment)Year IT,Engineering and R&D, Software

Products ExportsIT-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

K J Joseph BRICS workshop Rio 25-27 April 07

 Shift from onsite to offshore

0

20

40

60

80

100

120

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05*

Offshore

Onsite

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

International Quality Accreditations

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

K J Joseph BRICS workshop Rio 25-27 April 07

Innovation System and India’s ICT Development

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

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 …..

K J Joseph BRICS workshop Rio 25-27 April 07

The Weak links

K J Joseph BRICS workshop Rio 25-27 April 07

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

K J Joseph BRICS workshop Rio 25-27 April 07

Strong networking with foreign firms: (outsourcing & mergers)

Sectoral Composition of M&As in Indian Companies

  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

K J Joseph BRICS workshop Rio 25-27 April 07

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)

K J Joseph BRICS workshop Rio 25-27 April 07

Demand : ICT diffusion

Teledensity in Rural and Urban Areas of India

0.43 0.52 0.68 0.93 1.21 1.49 1.55 1.74

5.78 6.878.23

10.3712.2

14.32

20.79

26.2

0

5

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004 2005

Rural

Urban

K J Joseph BRICS workshop Rio 25-27 April 07

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

0

0.2

0.4

0.6

0.8

1

1.2

Sh

are (

Percen

tag

e)

Industry

K J Joseph BRICS workshop Rio 25-27 April 07

ICT boom and other Sectors:Competition for skilled manpower?

Performance of Sectors Competing for Skilled Manpower in Karnataka

0

5

10

15

20

25

3082

-83

83-8

4

84-8

5

85-8

6

86-8

7

87-8

8

88-8

9

89-9

0

90-9

1

91-9

2

92-9

3

93-9

4

94-9

5

95-9

6

96-9

7

97-9

8

98-9

9

99-0

0

Capital Share Employee Share output Share

K J Joseph BRICS workshop Rio 25-27 April 07

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???

K J Joseph BRICS workshop Rio 25-27 April 07

Thank You Very Much