Interview - Hemant Bharat Ram

What are the challenges that lie ahead for the IT hardware industry?

The hardware industry in India is facing quite a few challenges, some of

which have been mentioned in the IT Task Force report. From the manufacturing

point of view, we are not geared for a quick response time. The IT industry

moves in a very different pace than other industries. Most of the hardware is

commodity. If we have to differentiate ourselves in the international market, we

not only need to be strong on the manufacturing front, but should be superior in

innovations, especially in the area of design. Some of the major issues are

procedural. We are pushing for the second report of the IT Task Force.

Do you think lack of finance is a challenge the hardware industry is facing

in going all out in designing its own products?

I do not agree with that view. Finance is available in large amount in the

software industry. We also have good designing companies in Texas Instruments

India and Motorola. Once the companies become profitable, finance should not be

a problem. What we need to do is lot of marketing for the products in the

international market as Indian industry is not big enough.

What steps do you expect from the government for the growth of hardware

industry?

We have listed our expectations in the IT Task Force report on the IT

hardware industry. We have sought technology parks for manufacturing sector on

the lines of software technology parks. It is not as easy for the manufacturing

sector as it involves various issues such as sales tax, excise, customs duty,

labour etc. We need to create a consensus. The government is looking at these

aspects from the revenue point of view. It seems to be asking whether the

changes would bring down the revenue to the government?

We are doing our bit to mobilise consensus. I am reasonably confident that we

will be able to convince the government.

What has happened to your demand for higher depreciation for companies and

reduction in post-manufacturing levies?

The depreciation has been raised from 20 per cent to 60 per cent, which is a

great move. But we are asking for 100 per cent. We now have to wait till the new

government takes over. It is very hard to predict whether our demand will be

accepted. But, they (the officials) understand that technology gets obsolete

very fast.

As for post manufacturing levies, it is there in the World Trade Organisation

agreement. The government is looking at the short-term impacts. But, I do not

think the tax collection from this sector is so big that they should worry in

reducing the levies.

The much talked about IT Task Force reports on the hardware industry is yet

to be ratified by the government. Why is it getting delayed? When is it expected

to be accepted and implemented? What are the repercussions of this delay for the

hardware vendors?

Some of the major concerns (on the recommendations of the report) have come

from the finance ministry. We are explaining to them why they should not worry.

There are some revenue and legal issues. The finance minister is aware of the

report and a MAIT delegation has also briefed him on the report.

As for the repercussion of the delay in implementing the report, the hardware

industry is already showing negative growth. The writing is on the wall. The

longer it takes (to implement), the harder would it be for us.

It has been seen in other countries that the biggest boost to the IT sector

came from high government spending in computerisation. We are yet to see that in

India. What are the reasons? Does MAIT have any strategy towards this issue?

When do you see the government seriously looking at large scale IT spending?

One major reason for computerisation is competition. It puts pressure on the

corporate players to improve internal efficiencies. As the competition increases

in the public sector undertakings (PSUs), their IT expenditure will also rise.

In the banking sector, the MNC banks will drive computerisation.

However, in the government departments, there is a lot to be desired. They

are not implementing applications. Spending on governance applications such as

sewerage management is negligible. These are the issues. But, Andhra Pradesh is

showing the way. I am bullish. The awareness is clearly there. With budget

deficit, where will the money come from? A lot of this will happen if any one

party gets the majority. It needs to a lot of guts to take decisions.

MAIT was one of the first participant in developing the concept of National

Information Infrastructure. What developments have taken place under the NII

plan during the last 4-5 years of its inception? Do you consider NII a

non-starter? Why did the project slow down?

No NII is not a non-starter. It is happening on its own in some sense. For

the connectivity, the department of telecommunications has formed a panel for IT

enabled services. In the e-governance area, Andhra Pradesh will become a case

study. On the local language front, we have IBM PC DOS in Hindi. There are quite

a few Hindi web sites. A lot is happening. Many may not be visible.

But, how many people use DOS?

Agreed. But, there is a monopoly control on the popular operating system.

Unless they decide to change it, nothing can be done.

Where do you see the major boost in demand coming from — the corporate or

the home segment?

It will be the home segment, since computer is widely becoming a tool to

learn. The Internet will clearly be a driver. For the growth of e-commerce, the

poor infrastructure is a concern. Once they are taken care of, e-commerce will

also be a major factor in the boom.

What steps have MAIT and its members planned to boost the penetration in this

segment?

Many MAIT members are targeting the home segment with advertisement and

schemes. We also expect that real value addition and utilities on the Internet

will come into the market. We are bundling Internet time with PC sales. We are

also trying to work with ISPs too in this area.

The software industry is growing at a faster rate than its hardware

counterpart in the country. How do you see the software industry complementing

the growth of hardware industry? What kind of support do you seek from the

software industry?

Software brings utility to the hardware and therefore is a tremendous driver

to hardware demand. We are looking for support from India specific applications

such as Tally. We should have more applications. But, then it is a question of

return on investment. I am confident we will have the scenario where there will

be a huge market for software applications. If we did not have pirates in the

country, we would have been there much early.

Internet is seen as the prime driver in taking the PC to the homes. However,

we are yet to see a big jump in the Internet demand among the home users,

despite the arrival of private ISPs. What are the reasons behind this? When do

you feel the big boost in Internet demand will come?

The ISP market is still immature. Once connectivity improves, it will pick

up. Cable modem will be an interesting option.