Create Right ‘Eco System’ For Hardware

MAIT organized a timely national conference on ‘Powering Indian Hardware
& Networking Towards $ 62 Billion: Challenges For This Decade’ recently in
Mumbai. One only wished that Pramod Mahajan, the IT minister, was there to
listen to the speakers who gave insightful addresses on how to create the right
‘eco system’ for hardware manufacturing in the country.

The thoughts shared by FC Kohli, former Deputy Chairman of TCS and Ram N
Agarwal, MD & CEO, Wipro ePeripherals, particularly stood out for their
incisive analysis of factors that halt the growth of hardware manufacturing in
the country. They made some valid suggestions, which if implemented, can go a
long way in accelerating hardware manufacturing.

Kohli predicted that if the kind of freedom given to the software industry in
the country so far, is given to hardware as well, then the country has the
potential to reach revenues of $ 100 billion by the end of this decade as
against $ 62 billion predicted by the MAIT Ernst & Young study. He was
confident that even software has the capacity to reach the $ 100 billion mark.

We concur with Kohli, but with the rider that these revenues can be reached
only if a sea-change occurs in the policy direction of the Central as well as
state governments. No doubt, certain positive changes have already happened and
more changes are in the pipeline.

Meanwhile, take the glaring discrepancy pointed out by Agarwal that for every
printer he manufactures indigenously, he pays Rs 500 more to the government than
an imported printer! Is Mahajan listening? This anomaly needs to be immediately
addressed to in order to create a level-playing field for hardware manufacturers
in the country and create great amount of employment.

Kohli revealed that just four weeks ago, Dell made a decision to invest in
China instead of India, on a plant that would produce one million PCs every
year. What a loss for the country! The fundamental reason why Dell opted for
China and not for India was because he did not find the right ‘eco system’
for hardware manufacturing.

So, what are the factors that could create the right environment for
hardware? From among the several suggestions made by Agarwal, we would like to
advocate just three and request Mahajan to drive these in government circles.

First, give relative policy freedom. If India has made a mark at the global
level in software, it is because software has enjoyed policy freedom all along.

Second, give freedom from taxation in initial years. Just compare the
tax-free regime enjoyed by software and the innumerable taxes levied on hardware
by Central and state governments.

Third, provide the initial catalyzation by accelerating government purchases
of hardware.

Mahajan has just two-and-a-half years to implement these suggestions and we
are confident that with his dynamism, he will act on these for the good of the
people of this country.

sylvesterl@cmil.com