Firstly, the government should stimulate IT adoption and absorption in the micro, small and medium enterprises space. The increase in demand for IT products and services will have a cascading impact on SME IT firms (which constitute the larger IT supply ecosystem) as adoption will generate demand for indigenous products and services.

Two, encourage the ICT hardware manufacturing sector through inward investment and incentives. India consumes a huge amount of ICT hardware, which is largely supplied by MNC firms.

Replacing imports with indigenous manufacturing through FDI will enable India to curtail expensive imports. It will also foster another ICT industry segment for exports. More ‘technician’ jobs will get created in both manufacturing and services.

Build IT skills Three, there is a paucity of IT skills at the lower end of the spectrum, especially for positions such as data entry operators, hardware technicians, website/portal operators, network technicians etc.

A majority of the workforce in micro and small firms is made up of those with high school education transitioning from agriculture to industrial livelihoods.

The only training they receive is typically on-the-job, with few opportunities for continuous skill development.

As IT adoption proliferates, there will be greater demand for operational skills by first-time IT users. Therefore, there is an urgent need to develop skilled human capital, especially in Tier-2 and -3 towns and rural locations.

It is imperative to improve the quality of vocational educational institutions. Barring a small number, the majority of such institutions do not offer skill building in IT. Many institutions have outdated curriculum with no standardised assessment frameworks.

The Government can stimulate the SME IT sector by focusing on some key demand-creation measures.

It can provide help with quality certifications, access to testing laboratories (especially for SME hardware manufacturers), access to financing and so on.

The Government must gradually morph its role from one of direct intervention to become an enabler and develop India’s technology innovation ecosystem.

It should establish a corpus to energise seed-stage/angel funding. Instead of investing directly in start-up IT firms, the corpus should act as a ‘fund of funds’ and provide capital to VC funds focused on early-stage ventures.

This will enable the Government to leverage the expertise of the private sector.

The Rangachary committee had undertaken a holistic review of SEZs and other taxation issues related to the IT sector. Its recommendations were comprehensive and should be implemented in their entirety.

(As told to Adith Charlie)

The writer is Vice-Chairman of Tata Consultancy Services

>Click here to read the interview

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