BackIndia salutes IT’s tigers
India salutes IT's tigers
Premium
The growth and success story of the IT industry is so fascinating that it caught the imagination of solution-providers and cost-cutting industry all over the world. ‘Theirview’ by Ashish Arora, Mint, 4 April, analysed this extremely well and pointed out that India, Ireland and Israel have emerged leaders in this area for their distinct advantages—large pools of engineering talent, entrepreneurship and connectivity to the outside world. In contrast, the absence of these in Russia and eastern Europe has hampered their growth. His broad conclusion was that there were no policies such as creating clusters, encouraging venture capital, subsidizing R&D and special preferences. But in the case of Israel, the author admits that Israel relied on high-tech start-ups fuelled by large public investment in science and technology. Is it not really the obligation of the government to subsidize R&D and to keep up a supply of talented engineers to our own industry? Also, it is public policy that kept corporate profit tax rates low and induced multinationals to enter the IT industry in Ireland.
The success story of IT service exports is unique in one way. It was the deliberate policy of the government to keep this sector away from the clutches of regulation and control, but totally tax-free to begin with. Our IT industry has showcased India’s ‘brain power’ in innovation and technology and earned recognition for our entrepreneurs as an emerging global power. All major international companies are here, in pharmaceuticals, in software, in chip-building, in telephone equipment and so on. How could this happen now and not before 1991? India, in 1991, adopted its ‘economic reforms policy’. For the first time, post-independence, the Indian state trusted its citizen-entrepreneurs and allowed them to grow and create wealth for the country in the process. All bottlenecks and controls which were virtually gagging private entrepreneurship were sought to be removed. The results are visible in the vibrant industry today. It is an irrefutable fact that the IT revolution might not have happened had there not been a totally liberal policy allowing private capital in the telecom sector, the IT industry’s first requirement for any significant success. Today, the government earns around Rs23,000 crore from the telecom industry without incurring a single paisa of capital expenditure.
The article said the second important factor for this IT boom was that NRIs and the founders of the IT companies happened to be working with various MNCs and those MNCs nurtured all these emerging companies. This is not really an important issue, to my mind. It is the entrepreneurship of the founders of those companies—thousands of them—who returned to their motherland, with or without such ‘nursery training’, that’s important. I firmly believe that their entrepreneurial spirit made all the difference.
It is equally true that after the reforms were launched in 1991, India moved from the ‘Hindu’ rate of growth of 3% to the present 9%-plus. This is again driven by entrepreneurship. Else, with just the MNC ‘nursery training’, how could Indian entrepreneurs thrive and buy company after company in Europe and America? It is fortunate we have entrepreneurial resources spanning all states, whatever their ethnic stock. The only conclusion I would draw from the article is that policymakers (Parliament and state legislatures) should give entrepreneurs enough business space to grow by not obstructing them in the name of regulating businesses. If we can learn and abide by this lesson, India is bound to become a global giant and its entrepreneurs will outshine China and America in the not-too-distant future.
Surinder Singla is former minister of finance, planning & health, government of Punjab. Comment at otherviews@livemint.com
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
