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How India can become a technology leader

October 23, 2013 12:31 IST

How India can become a technology leader

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Subir Roy

There is a big hole in India’s electronics manufacturing capabilities, one that does not fit in well with the notion of a large economy with matching technology muscles, says Subir Roy.

How should India shape its technology policy as it moves to and beyond being the world’s third-largest economy? 

By happenstance, if not serendipity, the country has come to acquire a degree of capability in software that lies at the core of technology. But this is at a low level - by using cheap skills to do routine things efficiently. 

Indian providers will become the information technology (IT) partners of large companies in the developed world as they redesign their processes and systems. But there is a big hole in India’s electronics manufacturing capabilities, one that does not fit in well with the notion of a large economy with matching technology muscles.

The easy answer is to set eyes on product capabilities, whether in hardware or software. But there are pitfalls in the way of becoming a technology biggie, as the travails of technology leaders show.

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Image: Infosys campus, Bangalore
Photographs: Reuters

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It was as recently as yesterday that the world was used to looking with reverence towards the leadership of Dell and HP in personal computers, Cisco in internet routers, and BlackBerry and Nokia in handsets.

If there was a super league above these, nearer to the gods, then it was the abode of Microsoft in software products and Intel in chips. But that was yesterday.

Each of these giants is now trying to find its way in troubled times. The gnomes that haunt them are the tablet, the smartphone and the internet.

Dell and HP are taking a knock in the sale of personal computers; Cisco’s routers do not command the premium they used to; Microsoft’s Windows operating system is now a laggard in smartphones and Intel is also battling in the market for chips for smartphones.

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Photographs: Reuters

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Microsoft has acquired Nokia’s handset business in the hope of making a late entry into the smartphones party and BlackBerry is going, going and virtually gone. 

Today’s hardware leaders, with astronomical valuations, are Apple and Samsung; in the internet space it is Google and Salesforce.com that hog the limelight.

The moral of the foregoing is that if there is anything more difficult than journeying to the top of the technology heap, then it is remaining there. Again, the easy answer is: don’t go prospecting for gold, try to be the leader in making picks and shovels. 

No sooner have you articulated this than you realise there is a special lesson to be learnt from the gloom that has engulfed the semiconductor manufacturers of Taiwan.

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Image: Nokia Lumia 1020
Photographs: Courtesy, Nokia

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Apple rides on Taiwan’s chips to super-profits, while the chip makers rue their thin margins and lack of glamour that makes young Taiwanese engineers look for careers elsewhere. 

One idea is not to have a precise road map. Keep tariffs low, provide first-class infrastructure, vastly reduce the cost of doing business and let the country go where technology-driven market forces will take it.

The classical attempt by a large economy to try to have a catch-up strategy and then give it up is the US government’s experience with Sematech. It was set up in the mid-eighties with leading US semiconductor players and a government subsidy, in order to catch up with the Japanese in chip making.

The idea was given up, the subsidy ended in a few years, and Sematech became a global co-operative technology venture. 

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Image: Apple store in New York.
Photographs: Reuters

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How India can become a technology leader

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Another idea is not to do nothing but to do a bit of everything - something plus nothing. In keeping with this, the government has finalised subsidies for the country’s first semiconductor manufacturers.

There is also strong lobbying to raise import duty on a range of electronic components so as to encourage their local manufacture. There is sense in removing duty anomalies, but none today in protecting an “infant industry”. 

Meanwhile, individual initiative is not sitting idle and innovation is taking place where it can come most logically — applications, or apps, for hand-held devices and solutions for the internet space.

Sequoia, a venture capital firm, feels these are crucial times for India since major mobile start-ups are likely to emerge from here.

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Photographs: Reuters

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This is because the number of handsets in use in India is second only to China’s and there is a huge need for solutions in mobile remittance, healthcare and technology. Leave it to Indian innovators to devise lowest-cost solutions. 

One sound step towards a technology policy is to raise the standard of science teaching and research in India’s teaching institutions. Their pathetic ranking in global league tables tells its own tale.

Another is to facilitate start-up funding, maybe by matching a privately raised rupee with a government rupee.

Yet another is to go beyond Bangalore as a cluster for innovation by conceiving a quadrangle - Bangalore, Chennai, Hyderabad and Pune. In short, the government must be innovative in shaping its technology policy.


Photographs: Reuters

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