labels: confederation of indian industry, nasscom, gujarat informatics, it news
CIT 2002 throws up issues that block IT growth in Gujaratnews
Suneeta K
07 January 2003

Ahmedabad: The mega IT fair, Communication and Information Technology (CIT 2002), organised jointly by the Confederation of Indian Industry (CII), Gujarat Informatics Ltd and Nasscom, has just concluded and a number of issues have come to light.

There are problems, there are opportunities and there are lessons to be learnt… And the bright side to the story is that IT centres other than Bangalore, Hyderabad and Pune are to flourish.

One of the major requirements, as pointed out by CII director-general Tarun Das, is that in order to become a strong player in the IT sector, states like Gujarat that have the inclination to step into the IT arena need to focus on human resources, integrate the expertise of institutions like IIM, EDI and NID with business, and create a feel-good factor for investors from outside the state, national as well as international.

There is a large potential for tapping the software requirements of the domestic, small and medium enterprises as well as overseas companies. Listen to Das: “Over the next decade, there is going to be a major shift of IT and IT-enabled services (ITES) from high-cost countries like the US to cheaper destinations like India. India will become the global hub for IT services in the future. But exports will not be smooth as there will be opposition from within the US, Europe and Japan due to the slowdown in their economies.”

Gujarat already has several advantages as far as attracting investment is concerned. These were summed up by Bharat Desai, chairman and CEO of the $172-million Syntel Inc of USA, who said Gujarat should focus on its unique strengths like business acumen and ability to overcome odds.

Commenting on the business models of today’s IT companies, Chirag Mehta, chairman of CIT and also managing director of Icenet, one of the state’s largest ISPs, said businesses today are driven by knowledge and not by wealth and inheritance. “Gujarat has four cell operators, three basic telephony operators, 25 operational ISPs, three call centres and a number of software companies. But a major problem faced by IT companies today is funding as banks are reluctant to fund and venture capitalists have become overcautious after the dotcom debacle.”

According to Mehta, if funding could be taken care of, not only would the IT sector grow but the growth in this sector would fuel growth in other sectors as well since just 1 per cent increase in tele-density leads to as much as a 3-per cent growth in the GDP. Funding has remained a major problem because banks do not want to expose themselves to the high risks involved in IT ventures.

Moreover, banks have always had an aversion to lending for projects that are not asset-based. In such a scenario, the saving grace has been Gujarat Venture Finance Ltd (GVFL), which has a special Rs 19-crore fund for IT companies, called the Gujarat IT Fund.

Also, the Gujarat government has promised more funds for GVFL itself to enable more IT and ITES companies to come up in Gujarat. In fact, recognising the support of GVFL to IT companies, its managing director, Vishnu Varshney, was felicitated by the CII during the event for his contribution to the Indian IT industry through venture capital funding.

Apart from funding, a few other problems were pointed out by visiting dignitaries. These include lack of trained personnel and a dearth of English-speaking people, among others. Says Desai of Syntel: “Gujarat must work on creating a pool of trained IT manpower by putting in place a proper educational infrastructure and focus on English language education to emerge as a major IT and ITES hub.”

In fact, lack of English-speaking personnel was one of the main reasons why the Nasdaq-listed Syntel did not even consider Gujarat while putting up its tech-development park in India a couple of years ago. What might have rightfully come to Gujarat instead went to Maharashtra (Pune) simply because there are not enough English-speaking people in the state.

Syntel is now investing $100 million over the next four years to put in place a 9,000-seat tech park at Talawde near Pune. This investment could easily have come to Gujarat and the loss of this foreign direct investment (FDI) should be an eye-opener for those who oppose the use of English in the state.

The two-day event also threw up some questions. Rajesh Kishore, secretary, IT, government of Gujarat, made a significant comment when he said: “We are still hunting for answers as to why Gujarat has not become a hot destination for IT investment despite the top quality infrastructure, relatively economical real estate and big market potential.”

There could be many reasons but there is no point in crying over why Gujarat has lagged behind states like Andhra Pradesh and Karnataka. Instead, the need of the hour is solving the problem of funding, training of personnel, encouraging the use of English (in fact, making it compulsory in all schools, like Chhatisgarh has done), making realistic plans (remember the ambitious Vision 2020 Plan and the way it lies in the dustbin today) and implementing projects honestly.

And last, but not the least, the government needs to make sure that peace prevails in the city and everybody feels safe in order to do what Gujaratis do best - business.


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CIT 2002 throws up issues that block IT growth in Gujarat