July/ Aug 1996
During the eighth five-year Plan period, the software industry had surpassed the targets set by the government and achieved a compounded annual growth rate of 54 per cent. However, setting a target of eight-fold increase in India’s software exports during the Ninth Plan period, which requires an investment of Rs.10,100 crore over a period of five years, seems to be a tall order.
The Ramani panel, constituted by the MoE and Nasscom, has reviewed the industry’s status and made projections for the Ninth Plan period (1997-2002). According to the panel, the target of Rs.21,800 crore in 2001-2002 and a compound Annual Growth Rate (CAGR) of 42.6 per cent could be achieved only if the government implements the recommendations in toto.
Speaking on the condition of anonymity, industry sources, although they welcome many of the panel’s recommendations, are sceptical of the government’s ability and the will to implement them. However, if the government implements 60 per cent of the recommendations, the panel projects a four-fold increase and a CAGR of 28 per cent. This, for many, appears to be a more realistic scenario.
The panel has identified the following as the main weaknesses of the industry:
Given this background, the panel recommends the setting up of 50 software cities. “Preferably in the vicinity of engineering colleges and non-metro areas to avoid dislocation of prospective entrants,” says Ramani.
“Setting up of 50 software cities and letting them interact with local educationists is very healthy,” says V. Chandrasekaran, Managing Director, Pentafour Software & Exports Ltd.,
Others differ. “It is difficult to conceive 50 software cities coming into existence in a reasonable period (of time). Bangalore itself has taken more than a decade to come to its present level. It will be much better that the present software cities are given both government and planning bodies’ greater focus, degree of encouragement and access to the existing government infrastructure than to scaller the nation’s scarce resources to 50 software cities,” says L.K. Vohra, senior Vice-president (human resources & corporate services), Square-D Software Ltd.
To meet the manpower requirements in the short run, the existing IITs could double their output by increasing the faculty and running two shifts. This does not require heavy capital outlay. The panel suggests setting up of Indian Institute of Information Technology (IIIT) for co-ordinating and managing manpower programme. Vohra, however, feels that the setting up of IIITs may not produce the quantum of experienced “technical human resource” (THR) with the requisite maturity to contribute effectively towards boosting export revenues.
Some feel that schools should be the focal point for computer education. “Catch them young and provide training. Only then you can produce ace programmers, analysts and project managers. The recommendation regarding altering the curricula to meet the current requirements is a good one,” says Maurice A.Ryan, chairman and managing director, Data Software & Research Company Ltd.
To promote product innovation, financial incentives could be offered for in-house R&D, besides encouraging multinationals to set up R&D facilities in India. The panel has suggested that as in the US, government should fund joint R&D initiatives in private industry.
The panel has recommended vigorous computerisation of government sector and increased IT diffusion in the country. The panel has also recommended many incentives such as zero import duty on software, a venture capital scheme, special provision for sweat equity (such as stock options), merger of Export Promotion Credit Guarantee, EOUS and software technology parks schemes into one and streamlining and granting other fiscal incentives and facilitating measures.
Many in the industry feel that the Ramani panel’s recommendations smack of pre-liberalisation orientation. The panel is expecting too much from the government, which, they point out, goes against the spirit of economic reforms. Boosting the exports depends, by and large, on the individual company’s business strategy.