IT Development Through Political Entrepreneurship

The state of Karnataka is another example of political leadership in the technology sector. The state government announced India's first state IT policy in 1997, which was an important catalyst for the growth of the IT industry in this region containing the Indus Valley of Bangalore.

In addition, the government recently announced its Millennium IT Policy called Mahithi ^[4] to keep up with the changing needs of the IT industry. Striving to utilize the key strengths of the IT sector, this policy aims to address gender, poverty, and unemployment issues through the use of e-governance in developing a more proactive and responsive government. Mahithi offers important incentives in the areas of land costs, registration fees, and regulations for large corporations. It has been instrumental in establishing the Indian Institute of Information Technology in Bangalore with world standard infrastructure, sponsored by companies like Sun Microsystems, IBM, Microsoft, and Oracle. In an effort to bridge the digital divide, the government has invested significant efforts in providing a transparent and responsive interaction to take IT to the common Indian in Karnataka.

State governments can pioneer some of the most innovative policy moves to boost the IT sector. India's central government has followed suit with the creation of independent decision bodies that have the autonomy to carry out major IT initiatives and make direct changes in critical regulatory measures. Probably the most successful example of this is the National Task Force on Information Technology and Software Development, created at the impetus of the prime minister to address India's future growth needs in the IT and software industries. Pulling together influential "heroes" from a vast cross section of the society ” industry, non-government organizations (NGOs) and educational bodies ” this task force convened to make 108 recommendations for immediate steps that the government needed to take to boost the Indian IT industry. The results of this report and subsequent progress on the recommendations are placed on the Web site of the Ministry of Information Technology ^[5] , with complete information regarding which specific tasks have been implemented, which are in progress, and which have been rejected.

The active participation of this diverse task force resulted in a highly ambitious IT Action Plan. This plan is based on a clear understanding of the barriers to building the needed infrastructure to develop the Indian IT sector. The action plan defines several targets to break down these barriers including the elimination of environmental constraints, the promotion of the nascent VC industry in India, the penetration of IT for all by the year 2008, and a dedicated campaign for universal computer literacy for the masses.

This amazing shift in government procedures from bureaucratic red tape to that of open action is a resounding example of the Indian government's attempts to create the right environment for IT growth in India. Soliciting input from leading representatives of society thus becomes an important first step in achieving a fuller picture of the potential for IT, as well as structural and regulatory barriers that need to be addressed. In addition, support for these kinds of initiatives often needs to come from the topmost leader in the nation for a true mobilization of the sector.

R. M. Abhyankar, special secretary in the Ministry of External Affairs of the government of India, discusses some of the ambitious government initiatives for ensuring the success of the knowledge economy in India. He talks about the work needed to remove barriers to a widespread implementation of IT in India, and the importance of transnational flows of knowledge.

R . M . Abhyankar

Government focus: Ensure the Indian potential

As the consul general of India in the Silicon Valley during the IT boom, we dealt hands-on with the Indian government's ambitious targets in the IT industry to ensure that the Indian potential is not lost like it was during the industrial revolution. The government-established National IT Task Force sought to identify areas of key legislation and financial infrastructure, as well as to ease the synergy between the Indian software industry and successful Indians in Silicon Valley, like those represented by the IndUS Entrepreneurs (TiE).

There is an increasing flow of resources, ideas, and people in both directions, which is key. And we can expect this trend to continue, because many in the Indian software industry are trying to get IT-enabled services back to India due to the time difference and cost-savings differential. There are three levels at which this operates. First, there is the cr me de la cr me, where graduates from India's topmost technical universities like the IITs are setting up companies and leading entrepreneurship across both nations. Then we have Indian computer programmers with differing levels of expertise on limited visas. Finally, there are service sectors like call centers.

Wealth creation in India: Intellectual property is portable wealth

India's dramatic increase of software exports was due in large part to input from leading Indian entrepreneurs on government, telecommunications, and IT committees regarding needed policy changes. To capitalize on these links, we facilitated key connections between high-level government, policy, finance and industry representatives by early 2000, while well-attended events in India like TiE VC seminars emphasized the potential for synergy.

Very little of the wealth created by Indians in Silicon Valley has flowed back to India. Yet, there are new sources of wealth being created in India. There is an upsurge of financial resources due to the momentum created for the Indian software industry by companies like Infosys, Wipro, and Tata, which are hiring people for contracts with multinational companies and creating new applications and software.

A different form of wealth being created is in the form of intellectual property, which is equally important in the long term . This is done more in the U.S., because that is where the cutting-edge technology lies with opportunities to test different innovations. This experience is improving the whole outlook for the overall Indian economy. People are thinking of ways to further develop the Internet to serve the needs of mainstream industry. There is a different basis for entrepreneurship today as compared with the past colonial mercantile system, both because of the non “location-specific nature of the Internet, and because the actual resource used is brainpower. These factors are creating a new system of global linkages between economic partners .

Evolving Indian values and dangers of innovation in a knowledge economy

The experiences of Indians in the Silicon Valley are changing the values of people in India in terms of expectations about services, infrastructure, government, speed, and flexibility. Indians are beginning to expect the same hassle-free delivery, which is not always possible there. But this is good because they are pushing people to meet these demands, creating rewards for changing the old ways. People setting up companies in India are creating a new kind of system with contemporary requirements for employees and management. Indian society has changed tremendously due to the introduction of consumerism after the liberalization of the economy in 1991, and it is important to remember that these changes predate the effects of the technology industry in India.

The government also has to be extremely sensitive to the fact that rising expectations quickly lead to disillusionment if the expectations are not met. At the social level, access to the Internet can negatively affect social norms, for example with pornographic sites. In fact, with regards to cyber laws, India was one of the first countries to accept online documents legally. At the same time, a key concern at the government level is the dangers of cyber-terrorism. India is again one of first countries to have laws against cyber-crimes.

Government initiatives: Innovative IT applications for the masses

India is aggressively addressing bandwidth shortages, which are a huge constraint in meeting IT targets like our expectations of the Indian software exports reaching $50 billion by 2010. Many regions are being developed with fiber optic infrastructure, because we have a great awareness of the need for connectivity in India to become globally competitive. The government is making a conscious effort to use the existing and potential technology of the IT industry to achieve developmental initiatives in education, health, business, and trade, aiming to make things easier.

At the same time our government is also exploring innovative applications of the Indian IT market like better availability of farm prices for agriculture and small businesses. India is already experimenting with e-governance, online education, and major initiatives to get IT to the masses, all of which require key legal resolutions .

However, it is imperative for India to find a viable way for IT to improve the lives of everyone in India. If not, the IT industry will remain insulated , creating wealth for some Indians, but not creating the widespread impact desired. While there are many examples of the potential applications of IT for the good of the common Indian, the most important initiative is the use of the Internet to spread education to the masses.

We need legislation as a framework for growth, but we also need to make sure it does not inhibit entrepreneurship. So what we need is regulation, not control. In fact, a single regulator is preferable for all IT- related issues to truly ensure fair business practices. The question then remains, how do we remove or alleviate existing laws affecting the IT sector without diluting their initial purpose?

From the government perspective, the influx of technology needs to be carefully harnessed so that the Indian potential is fully developed within the knowledge economy. While a majority of the wealth created by Indians in the Silicon Valley remained there, a different form of wealth is accessible across transnational boundaries ” intellectual capital. The cutting-edge expertise and knowledge acquired by the NRI population in Silicon Valley is a vast asset for future developments of the Indian software industry, especially in its move up the value chain of higher value-added services. We shall now examine the effects of increasing transnational connections on the dangers of a digital divide in India.