As good as IT gets

Unfortunately, IDC also expects the software, hardware and IT services industry growth rate to peak at 21 per cent in 2005. In other words, right about now is the best IT phase India can expect for at least a while. The 10 billion just bagged are proceeds of a decade8217;s efforts by industry and government to push out the right talent, tax sops and negative publicity since the dot-com days.

India does have chances of going global, particularly after the big-ticket IT investments recently announced, said Vinnie Mehta, executive director, Manufacturers Association of Information Technology MAIT. 8216;8216;The presence of top manufacturers shows that global players are taking India more seriously.8217;8217;

The 10 billion, when looked at this way, will leave India with a software and service industry worth over 50 billion in 2008 thus meeting government targets. But India may still end up with a rather limited PC, electronics and computer software industry.

Today, there is no branded PC from India, no Operating System software that makes computers work, no game or gaming console, a PC base largely limited to urban Indian offices. There is no music download plug-in, nor playback device. In short, none of the killer IT that is, at least internationally, moving consumer markets.

Making the most of investments India has recently bagged, is therefore, key. 8216;8216;By 2004, of the ten top global technology vendors, nine were already in India and had investments. R038;D seems to be an abiding interest from India. Though AMD8217;s announcement is linked with production, bulk of the other investments have been towards development activities,8217;8217; says industry sources.

Last week, AMD signed up to transfer its chip-making technology for India8217;s first chip fabrication unit worth 3 billion being funded by NRIs. AMD has brought the computer industry close to its under-100 PC ideal, but for market leader Intel, which is still not investing in its core business of computer chips in India, this is not enough.

At an hour-long session with the Indian media, Intel chairman Craig Barrett spent half his time explaining why Intel manufactures at two places 8212; China, and Ireland 8212; and will sign into Israel as well, but not in low cost, engineer-churning India.

8216;8216;There are a number of factors. On top is the installed base of PCs Israel: over 50 per cent, India: 0.03 per cent. Chip-making is relatively capital intensive, so tax rates are almost as important as labour costs. We look at the total cost of operation and the back-end infrastructure, which happens to be extensive in Ireland,8217;8217; Barrett said.

Going by these trends, the options for India are clear: Make the most of technology transfers, keep service offshoring costs down and build new intellectual IP in software and hardware.