Meddlesome Ministry?

The infotech whizkids aren’t amused. Despite the sector leaders blazing new records on the bourses and creating new corporate folklore everyday, the industry is majorly worried over a government move that many initially thought was momentous.

The Vajpayee government’s decision to create a new IT ministry under one of his trusted lieutenants, Pramod Mahajan, more than a decade after late prime minister Rajiv Gandhi expressed his intention of doing so, has the industry on tenterhooks. Far from rejoicing over the formation of the ministry, India’s most vibrant industry seems to have plunged into a fear of the unknown. Are its sunshine days over?

The worry isn’t without reason. The infotech sector has been a dramatic success story in India, growing like nothing on earth. In 1998-99, it grew by 32.79 per cent over the previous year. According to estimates made by the National Association of Software and Service Companies (NASSCOM), the sector posted a Cumulative Average Growth Rate (CAGR) of a whopping 40.5 per cent, more than double of other sectors, between ‘94 and ‘99. The point to remember here is that all this was achieved without the benevolent eyes of a holding ministry. Now that there is one, and considering how government intervention has ruined things in other sectors, what is going to happen to the software boom?

That’s still an unspoken fear, though. While a senior industry spokesperson wondered off the record whether Mahajan might have been more suitable for other dynamic areas besides IT, most prefer to be non-committal on the issue. Says a top official from a computer company: "Now that the ministry is a reality and can’t be wished away, we should look at it positively for our own sake. Countries where the IT sector is highly successful like ours don’t have such a set-up. The government extends all support through a conducive policy framework rather than ministries."

The new ministry is aimed at giving a much-needed boost to the sector in terms of policy and legislation as well as to clear the hurdles in the way of higher growth. But what the industry fears is that the government will just complicate things-traditional ills like bureaucracy, red tape and delays will enter a sector that has been a byword for efficiency among Indian industry. As Sharad Talwar, marketing manager, HCL Infosystems, says: "Even if its intentions are serious, the problem is that whenever the government enters an area, it is perceived as a roadblock towards success."

The general feeling is that the government has done too little and whatever more it’s trying to do is too late. Also, now that the industry is reaping a bonanza on its past efforts, the government’s actions are sending the uncomfortable message that it too wants a share of the pie. Says an IT sector expert: "It’s a huge disappointment. What was the need for imposing a ministry on us when we were doing well and earning good revenue for the country? Electronic ministries require people with specialised skills and experts. Instead, we have people with no proven IT experience. On the other hand, the Department of Electronics, which earlier was forthcoming, has closed its window, so to speak. The people at the helm today have no time to listen to the industry. We have been trying for an appointment for the last several days and got none. In infotech, two months is eternity. Can we afford to wait?"

Many also wonder why, instead of bringing all related ministries and departments under one head, the government has chosen to carve out another source of authority. Says Vinnie Mehta, executive director, Manufacturing Association for Information Technology (mait): "Today, IT people have to go to different departments for different purposes. It can be avoided if departments like telecom, electronics and the ministry of information and broadcasting (I&B) were brought under one umbrella to provide a single window to the IT sector." Indeed, an Internet Service Provider now has to run to the Department of Telecom for connectivity, to the I&B ministry for uplinking and software clearance, and to the ministry of IT for infrastructure.

The government, obviously, differs. It expects to bring in an attitudinal change in itself and the bureaucracy towards the use of IT. Says a top official: "The aim is to bring into the IT sector the revolution seen in the finance sector in recent years. It can’t be done through related ministries like communications and I&B because apart from lack of coordination, a lot of historical baggage is associated with these ministries which one cannot get rid of. State endorsement of IT as an engine of growth has succeeded in states like Andhra Pradesh and Karnataka. Why can’t we do it nationally?"

Not that there aren’t any in the industry who’d love to agree with the government. They believe that there are several grey areas in the sector which the private players can’t change. Says one: "Our aim is to make the sector a $100-billion one. Is it possible to do it without government help? IT task forces have come out with several reports but how many of these have been implemented? Even the IT Bill has been passed but who will take responsibility for its implementation? While the other related ministries agree on these issues, none are ready to take the responsibility of implementation. This is where the new ministry will be useful. Also, if e-commerce has to succeed, a lot of peripheral work needs to be done. I don’t see how that can be done without the presence of a holding ministry."

Echoes Vineet Nayar, president, HCL Comnet Systems: "If the fear is about the government redefining the tax structure to the industry’s disadvantage, I frankly think no one can tamper with the present structure. Why don’t we see the ministry as a facilitator and a coordinator with other ministries, something that has been a problem in the past? The fact remains that if India wants to take the IT sector from today’s $3 billion to a globally competitive $100-billion industry in the near future, a lot of effort has to be made in education and legislation to make people aware and to make e-commerce happen. This can be done only by the government as the private sector does not have the resources to take us to that level."

A reason why the government planned the Rs 100-crore venture capital fund. Nayar believes that if India’s IT revolution has to begin from the grassroots, by tackling basic computer education at the school and college level, the only answer to making India a global player in e-commerce, the government has to come in. Says he: "Can today’s 500 IT companies help us touch the dream turnover figure? We need a couple of thousand more and this cannot happen without government funding." Mehta disagrees. "The IT sector doesn’t need money but a conducive policy environment for growth," he says. He is right. If there’s any sector in India right now that has moneybags coming to its doors, it’s the infotech sector. The government would do better to utilise its precious funds on other infrastructure sectors, experts feel.

Still others, though skeptical, have suggestions for the government. Ravi Agarwal, vice-president, computer products, Hewlett-Packard India, says: "Once an industry gets on a pedestal of growth, sometimes having a catalyst helps. That’s what this ministry can do. If it can raise voices and the right kind of issues favouring the IT sector, we may have something to rejoice about. If the PM understands IT well, he can help develop many other islands on the lines of Bangalore and Hyderabad."

Says Mehta: "We want a better interface between the government and the industry and the new IT ministry might be the best suited to provide that. We really want it to be in a collaborative mode with the industry and change the current policy framework that is skewed against us. Through the ministry, we can now look forward towards a national IT policy." Some others also feel that the government should give the ministry enough teeth to take decisions rather than just having to run to other ministries for clearances. Says Agarwal: "The ministry should have independent decision-making powers and not be merely an endorsing authority."

Clearly, the new ministry has much on its plate. And unless it acts fast, its cyber dreams of a share of the global infotech business pie will remain just there-in the sky.