`Hardware is a great opportunity for India and Chennai'

Our Bureau

"Besides a strategy for IT growth, the State needs industrial clusters to foster growth of niche industries"

Chennai, Sept. 10

Tamil Nadu has a potential to achieve 25 per cent share of the Indian market for information, communication and technology, which is about $30 billion revenue across IT and ITES sectors. This would mean that Tamil Nadu would be able to generate over 20 lakh jobs by 2011, according to Mr Dayanidhi Maran, Union Minister of Communications and Information Technology.

The Nasscom has projected the software exports to be $90 billion by 2011. "Why not Tamil Nadu dream of $25-$30 billion by then?," he posed at the valedictory session of Connect 2006, an information, communication and technology event of Tamil Nadu, organised by the Confederation of Indian Industry and the Tamil Nadu Government.


Mr Anil Ambani, Chairman, Reliance Communications, Anil Dhirubhai Ambani Group, said a lot of focus had been given on creating infrastructure such as roads, ports and airports. It is also important that the country needs "Info-structure," he said. Communication is a vital lifeline of the country to drive productivity and India's competitiveness. Given India's competitive strength and global leadership in IT, it is time to improve the connectivity and information available any time, any place, in any form and anyhow, he said.

Mr Ajai Chowdhury, Chairman and Chief Executive Officer, HCL Infosystems, said that Tamil Nadu could leverage itself as an IT destination by involving greater use of IT in areas such as education and creating Tamil content.

In the electronics manufacturing sector, he said, the State had so far concentrated only on hardware design. "Tamil Nadu must move into other stages of hardware manufacturing like prototyping, engineering, manufacturing and testing," he said.

Niche Manufacturing

Mr S. Ramadorai, Chief Executive Officer and Managing Director, Tata Consultancy Services, said the State should focus on developing expertise in niche manufacturing and services oriented sectors rather than aim to have average skills in all the sectors. "Besides a strategy for IT growth, the State needs industrial clusters to foster growth of niche industries," he said.

Mr Shiv Nadar, Chairman and Chief Executive Officer, HCL Technologies Ltd, suggested that infrastructure of tier-II cities could be improved by making corporates contribute to the development process. "The income tax paid by IT companies can be directed into building infrastructure in tier-II cities. Alternatively, the Government can exempt tax for companies contributing to infrastructure development in tier-II cities," he said.

He also suggested that the State build a metropolis at Hosur (near Bangalore). Citing the example of Noida (near New Delhi), he said the State could develop such planned areas to nurture growth of industries.

For India to develop competency in semi-conductor manufacturing, the Government's involvement in the project is a necessity, according to Mr Promod Haque, Managing Partner, Norwest Venture Partners (NVP).

Becoming a manufacturing hub for electronics and hardware could take six to seven years of investment without returns, which can only happen if the Government takes the initiative a hand. Then the private funding can takeover.

He said that hardware is a great opportunity for India and Chennai in particular to become an alternative destination for hardware manufacturing, since `the single greatest fear for companies in the US is that they are outsourcing manufacture of products to a single source.' If the vision of increasing the ICT output to $30 billion (Rs 1,38,000 crore) from the current base of $5 billion, (Rs 23,000 crore) is to become a reality, these measures must be followed.

Product Development

Earlier, Mr Haque told the press that NVP would be looking to invest in India in primarily four areas semi-conductor, hardware, software and services, and telecommunications. He said that the next phase of growth in the IT sector in India is in the product development space.

He added that the semi-conductor space is one of the core competencies that need to be developed if Chennai is to become an electronics manufacturing hub. He said that a lot of high-end semi-conductor design happens in South India, only to ship the actual manufacture of it to Taiwan and China, some of which can well be done in India itself.

(This article was published in the Business Line print edition dated September 11, 2006)
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