Govt. must improve FDI climate to walk the digital journey

BANGALORE, INDIA: As the Union Budget 2015-16 comes nearer, research firm Gartner has put forth its expectations.

Partha Iyengar, Vice President and Head of Research - India, Gartner said the biggest expectations for the IT industry will be to put teeth behind the two slogans of ‘Digital India’ and ‘Make in India’.

A manufacturing revival in an IT savvy India would be a tremendous multiplier for the Indian IT industry, unlike in China, where manufacturing took off without too much IT support, and China is only now (last 2-3 years) starting to focus on IT as a white-collar productivity effort. This can be a game changer for India in the inevitable India vs China comparisons and a huge boost for Indian competitiveness on the global landscape.

Similarly, the ‘Digital India’ initiative has huge ramifications for the Indian IT industry and Indian industry overall as well. It will (hopefully) been better access to the vast areas of untapped rural India, which can drive unprecedented economic growth across industry, by allowing companies across all industries to tap the elusive ‘bottom of the pyramid’ economic opportunity. Country level infrastructure improvements needed to drive ‘Digital India’ will also help spur industries embrace of the digital business paradigm, which will increasingly be a competitive imperative in the coming decade, as digital business hastens the demise of ‘geographical reach’ as a competitive barrier. 

In order to achieve the above, the government needs to focus on the following, in order of priority: 

- Time bound execution of all initiatives - This has been the governments Achilles heel forever! Even when the funds are available, the inability to get anything done in a reasonable time-frame has been the biggest barrier faced by Indian industry. 

- Improving the FDI climate - To truly achieve the promise of these two initiatives (and assuming point #1 above is addressed), massive FDI will be required to support the infrastructure revamp. This will involve streamlining policies, accelerating reforms including (especially) tax reform amongst others. 

- Education system and Human Capital - The Indian education system and the resultant workforce has moved from being an asset in the early days of the ‘offshoring’ IT wave to being a liability today. The education system needs a major revamp to move the next generation of students away from the ‘do as you are told’ mindset to one in which they are encouraged to ‘think for themselves’.

Given that this is a long-term initiative, in the short term the government, working with industry and academia will have to drive some short to medium term programs to create the required human capital, through training initiatives, encouraging (and maybe even promoting/requiring) internships through one’s academic career, etc.

Secondly, focusing on improving the legions of academic institutes that continue to churn out un-employable graduates needs to be addressed on a war footing. Gartner’s conservative estimate is that only 20-25% of India’s graduate pool is readily employable. This has to change.