Encouraging IT Manufacturing in India

The current market for IT hardware and electronics in India is USD 36 billion per annum. This is expected to grow to USD 400 billion by 2020. As of now there is insignificant value add domestically for the IT hardware and electronics sold in India. As one of the policy measures to mitigate the above issue, Ministry of Communication and information Technology, Government of India has therefore recently come out with Preferential Market Access (PMA) notification. The Preferential Market Access policy provides for at least 30% of government IT market for domestically manufactured equipment as long as the equipment matches L1 (i.e. the least price bid for the tender) and Q1 (i.e. the best quality offered by any other entity for the tender). As per the PMA, products will be considered as domestically manufactured if they have at least 25 percent local value add. To implement PMA, the government has to construct detailed guideline and processes by which one can track the percentage of local value add for each kind of equipment. For example, if the equipment is a computer, then the government would need to validate how many components of the computer are domestically manufactured. In addition the government would need to define what constitutes a domestically manufactured component. For example, if the hard disk is imported into India and locally only casing is added to the hard disk, would this be considered to be a domestically manufactured component? Clearly, such processes would be cumbersome for the manufacturer to comply with and cumbersome for the government to monitor. Therefore the proposed rules will lead to significantly increased compliance costs and significantly  increased interference by lower levels of the government machinery as it would provide them with discretionary powers. The above process would also divert the attention of the manufacturer from manufacturing better product at lower cost to focusing on accounting procedures to prove larger domestic value add. The above regime would also lead to extremely complex processes to be adopted for allocating general expenses and common expenses such as sales and marketing, accounting, guest house expenses, ERP costs etc to each SKU manufactured. Such allocations will also get challenged by procuring agencies, leading to higher costs of litigation. The industry will get retarded as the industry will loathe moving to newer products since, for each new product, the entire process of demonstrating percentage of local content will have to be done from scratch. Even currently, government procurement, especially through DGS&D, inhibits newer products from being introduced as the rate contracts are for a year and does not factor in obsolescence and introduction of better products at same or lower prices. This is inimical to an industry where products get obsolete within three months. Moreover radically new products will have radically different architectures which will make it even more difficult for the innovators to prove the levels of domestic production to the government procuring agencies. The PMA policy also needs to be strengthened to ensure that it is able to accommodate radical innovations. The monitoring of PMA becomes more complex when one has to factor in and value domestic innovation and IPR as there is no watertight market based price discovery mechanism. MSME’s are the backbone of innovation. MSME’s already face significant challenges for manufacturing which is compounded by  manufacturing inspections and compliances which hold them back from innovation. It would be extremely challenging for MSME’s to face additional burden of having to prove domestic value add for their innovative products. Therefore, to promote innovation in domestic manufacturing the Government of India should consider updating its procurement processes to ensure that government can procure innovative products and thus promote innovation in  domestic manufacturing. In addition, the government should consider funding ICT manufacturing  research and development, adopt pro-manufacturing  tax rates and labour laws, and establish ICT manufacturing educational programs, and otherwise incentivize investment in the ICT manufacturing sector on a non-discriminatory basis. The government may also consider adopting labour laws that are specific to IT and electronic manufacturing industry to ensure an uninterrupted manufacturing environment. Specifically for the Greenfield and Brownfield clusters proposed to be developed under the Triad of IT policies should have all clearances and approvals a priori so that potential  manufacturers need not face the hassle of running from pillar to post to get clearances. In addition, these clusters should be declared as “Inspector- raj-free” zones. It is indeed a challenge to rapidly increase domestic content in electronic goods. Domestic Content can be increased in a phased manner with the development of component industry. A combination of good infrastructure, favourable tax regime, appropriate labour laws, conducive policies, capital at globally competitive costs, availability of skilled manpower and a proactive implementation of the manufacturing policy roadmap would go a long way in speeding up domestic manufacturing of IT hardware and electronics.

http://www.facebook.com/eGov2.0 

e-Politics

We are in the cusp of change when it comes to the manner in which politics is conducted

With the advent of Internet, there has been a significant democratization of the ability to distribute and consume information. The power to distribute information and the ability to reach out to the is not controlled by a few in the society. This has had disproportionate impact on all walks of life and society. However, this change in the asymmetry of power to distribute and consume information is only just beginning to impact the business of politics but growing at a rapid pace. In 2011, almost one-third of Internet users described the web as an important source of political information, compared with less than 15 percent in 2007 according to the Russian Public Opinion Research Center (VTsIOM).

We are in the cusp of change in the manner in which politics is conducted. Tweets from a twelve year old girl had galvanized the population of Seoul to converge at the Town Hall to protest against beef imports from US. A few years later, similar mobilization over the Internet had started toppling governments, starting with the Government of Egypt. Nearer home, civil society has effectively used the Internet to create one of the largest people’s movement since independence where people notwithstanding their geographical location joined the fight against corruption through the Internet. We have also seen how Internet is being used to run political campaigns and to also reduce the cost of campaigning. The presidential campaign run by Barack Obama in US was highly dependent on the Internet. Digital media gives any politician the "baseline" pulse thus knowing when people favor or disfavor the candidate and his/her policies. Thus, the internet allows trends of people’s expectations to be mined that would help politicians and policymakers to target people’s need more effectively.

Most importantly, we are witnessing the metamorphosis of democracy itself. Democracy is slowly morphing from being an Indirect Democracy to a Direct Democracy with people’s views being factored in for most policies that are being adopted by the government and for each legislation that is passed by the parliament. No longer do the elected representatives have the sole prerogative to unilaterally decide on what is the appropriate legislation and appropriate policies for the entire nation without any further consultation with the citizens. Thus politics is moving towards a more collaborative leadership model. Waves of ICT applications in politics have empowered groups of political neophytes (‘netizens’, ‘cyber-libertarians’), extending the power of people who are from the disadvantaged layers of society to shape and transform conventional politics into a stage of ‘virtual democracy’. This transformation is being expedited with the advents of Internet access over mobile phone which gives citizens new opportunities to mobilize and be heard.

Increasingly netsavy citizens share political content in real time. This can lead to phenomena such as the ability of the new-found tools for mass political mobilization. Internet was used as a tool in the Egyptian anti-government protests which further provoked a series of uprisings. In the case of Myanmar, where there are limited avenues to express dissent, the recent protests and their global impact were only possible through extensive use of mobile phones and the internet.

However, the disconcerting aspect of ePolitics is that in a society with an urban-rural digital divide, how do we ensure that we also do not have a divide over which sections of the population can express their opinion? What level of political dissent will be tolerated? In a world of government censorship crackdown, will citizens and smaller political parties succeed in finding alternative routes to safeguard their cherished freedom of expression? Such questions and the value of the internet to Politics will shape how politics will evolve with the power of Internet.

https://www.facebook.com/CenterforDigitalEconomyPolicyResearch 

Centre for Digital Economy Policy Research

Enabling eGov Opportunities and Challenges by Dr. Jaijit Bhattacharya

http://www.youtube.com/watch?v=SihO1uLe_Rg&feature=player_embedded

Enabling eGov - Opportunities and Challenges - Dr. Jaijit Bhattacharya 

"eGovernance makes the Government more efficient.

eGov 2.0: an evolutionary step towards a more efficient, , inclusive and participative government through the adoption of a set of new trends in business, operational, financial and technological models."

 

eWorld Forum 2012 

Dr Jaijit Bhattacharya, President, Centre for Digital Economy Policy Research (C-DEP) at the eWorld Forum 2012 – ePolitics

 

Dr Jaijit Bhattacharya, President, Centre for Digital Economy Policy Research (C-DEP)

eWorld Forum 2012 – ePolitics 

Imperatives for an Innovation Agenda in India

First published in eGov magazine, June 2012, Page 58-59

Innovation is critical to ensure that gaps between the oft-mentioned ‘two Indias’ can be narrowed and the economic and social growth can be made more inclusive. Innovation places  the information and communication technology (ICT) industry at the centre-stage, making it an engine of the knowledge economy

Dr Jaijit Bhattacharya, President, Centre for Digital Economy Policy Research

In the fiscal year 2011, the number of applications for patents filed in India rose to 37,000  from 34,000 in the previous year. Of these applications, 80 percent came from outside India.  Even as India continues to make its mark as a ‘knowledge’ economy, the creation,  application, commercialisation and protection of knowledge—all need more work before India  can be at the forefront of innovation in the world. Above all, there needs to be a national agenda for innovation, which penetrates down from policy to the individual user.

Learning from other countries
When it comes to policy, the US, UK, Europe and China are the leading examples of nations  with clear innovation agendas outlined. In UK, the existing framework under the  Department for Innovation, Universities & Skills (DIUS) has been performing well, especially  on the lifelong learning and early-stage venture capital front. The Innovation Nation White  Paper outlines the future of innovation in the country, providing intellectual leadership by  suggesting new policies based on new imperatives. Highlights include provisioning for  ‘hidden’ innovation and demand-driven ideas and fostering collaboration between public, private and non-governmental organizations (NGOs) to transform public services.
The US, recognises a vision and strong culture of innovation, and more importantly, successful commercialization of innovation in the country. The National Innovation  Initiative (NII) outlines the next phase in this journey, focusing strongly on the three pillars  of talent, investment and infrastructure. In both, the US and the UK, there is recognition of  the fact that the focus of research is skewed towards certain sectors—health science and  defence in the former and pharmaceuticals and aerospace in the latter. There is, therefore, a  conscious move to even the playfield for innovation in all sectors.
The European Union (EU)  stresses on innovation at both the Union level as well as the regional level. For Europe 2020,  the three priorities identified include smart growth, sustainable growth and inclusive  growth. The EU’s Innovation Policy places strong emphasis on social innovation, recognizing  it as “an important new field which should be nurtured.” The Policy suggests creating a  virtual hub of social entrepreneurs and supporting them with a European Social Fund (ESF).
China has been a strong science and technology innovation player. The Organisation for Economic Co-operation and Development (OECD), along with the Ministry for Science and  Technology have been reviewing the policies for  innovation in the country and have come  up with gaps that we, in India, would be quite  familiar with. As its medium and long-term  objective, China wants its dependence on foreign  technology to reduce by 30 percent and be  among the top five countries in the world in terms  of domestic invention  patents granted, and the number of international citations of its scientific papers.

Imperatives for India
The innovation strategy for India needs to have four very clear objectives to enable  innovation at the bottom of the pyramid (for and by the next billion), create an innovation  ecosystem, focus on local capabilities for both near- and long-term benefits and harvest  existing innovations so that the benefits reach a larger potential user base. This quadri-focal  strategy is outlined in the figure below:
Even as the near-term benefits spark immediate interest, the long-term vision needs to be on  creating a culture of innovation. And even as we invent solutions at the institutional level, we need to create a nurturing environment for innovations developed at the individual and grassroots level. The four types of innovation need an organisation created to identify and seed ideas to harvest them. Budgets need to be created to support innovations and interfaces evolved with other government agencies, the private sector and academia to foster them.
To build the environment for innovation, the strategy needs to address the following factors:

Ensure research converts to innovation:
Research is integral to innovation, but it doesn’t end there. For research to convert into  meaningful innovation there needs to be a three-way understanding between the public  sector, the private sector and the academia. Collaboration between industry and labs,  creating a framework for jointly-funded research, creating a functioning lab-less research  capability that leverages the existing facilities in the private sector, universities and the  government itself, and ensuring feedback for research are the other important factors.

Create a strong legal structure:
The intellectual  property rights (IPR) ecosystem is a minefield that needs careful navigation  coupled with a sturdy framework. For innovation to truly prosper, it is important that the  IPR of all solutions and innovations are legally protected. One of the biggest concerns for small  entrepreneurs and individual inventors is that they don’t know enough about existing  IPR and end up inadvertently infringing on them or losing their IPR to larger corporations.  These entrepreneurs need specialised legal and IPR support even as they are being incubated.  Small enterprises and individuals need to have access to online IPR systems so that they can  protect their IPR. Such systems should include online patent filing.

Enable business partnerships and incubation:
The gap between idea and adoption is filled only by the successful commercialisation of  research. For this, there need to be strong linkages between research and industry. The industry, with its in-depth understanding of the market and resources that can help bring  innovation to market, can help take the innovation to its logical conclusion. This can be  through direct or indirect involvement. An organisation could support incubation through  new and existing qualified entrepreneurs, support technology acquisition through buy-outs,  or even have summer-break programs for potential student entrepreneurs to work on their  ideas. In today’s complex world of technology, new innovations cannot thrive without access  to existing IPR.

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“The gap between idea and adoption is filled only by the successful commercialisation of research”

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Encourage community participation:
Inventions like jugaad are examples of demanddriven responses. Jugaad maximizes asset utilization by reusing the same pumpset that helps in irrigation, to also power the cart that helps take the farm produce to the mandi and provide locomotion to the villagers, thus  optimizing the economy as a whole and making the local economy more efficient. In fact,  jugaad is a symbol of community-driven innovation. However, it is also a perfect example of  how our policies stifle innovation. As per the Central Motor Vehicles rules, jugaad is illegal.  Not only is jugaad illegal, there have also been no steps taken to introduce this innovative   solution to other parts of the country such as the south or the east, thus depriving them of the
benefits from this innovation.

Develop policies to incentivise innovation:


India offers a unique chance and a ready testing ground for new initiatives and services.  Innovation aimed at inventing for the next billion will be most critical to develop, because  that will help narrow the divide between the haves and the have-nots in the Indian state. The  proposed US $5 billion India Inclusive Innovation Fund , to be launched by the Indian  government later this year, is a step in the right direction. Innovation, however, will always  be driven by people’s creativity and enterprise. And that’s what policy makers need to  nurture.

eGov 2.0: Policies, Processes and Technologies

e-Governance means the use of ICT to promote more efficient and effective government

e-Gov 2.0
Author: Jaijit Bhattacharya
Publisher: McGraw Hill
Pages: 604
Reviewed by: Anoop Verma

Arevolutionary restructuring of the government is underway through e-Governance, which has now become the fashionable mantra in all developing countries. We already have a growing body of literature in the media and in the policy making circles on e-Governance, yet this field seems somewhat under theorised, its boundaries are not clearly defined, and are often open to controversial interpretations regarding the main processes, technologies and the actors involved.

This welcome volume by Jaijit Bhattacharya contributes to the discussion by attempting to examine the technological, infrastructure related, economic, socio-cultural, political and regulatory issues that are influencing the development of e-Governance models in contemporary society. The book starts by looking at the emerging roadmap of e-Government, and  goes on to examine the basic structure of government as it exists today, from there it moves on to deliberate upon the various micro and macro aspects of e-Governance. The leitmotif of the book is to draw on socio-cultural theories and explore the ways by which e-Governance can bring transparency in the interactions between government, citizens, consumers and private businesses.

e-Governance is defined narrowly by Jaijit Bhattacharya in these words, “e-government means the use of ICT to promote more efficient and effective government, facilitate better access to government services, allow greater public access to information, and make government more accountable to citizens. Electronic government might involve delivering services via the Internet, telephone, community centres (self-service or facilitated by others), wireless devices or other communications systems.”

There are 26 chapters, all of which follow a similar format, as they begin with a short and crisp introductory note, which provide an overview of all the concepts that will be discussed in detail in the chapter. After that rest of the well-researched content follows. Covering such essential ideas like importance of public-private partnership in e-Government, Government Data Centres, National Citizen Identity Systems, Open Source Software in e-Government, Government Call Centres, Land Records, Urban Development Management Systems, e-Agriculture, Disaster Management System, e-Procurement and Human Resource Management System, this book enthuses a student of e-Governance by its analytical narrative from heterodox perspectives.

Incorporation of quite a few of charts, graphs and tables in most chapters makes it easier for the reader to get a grip on the concepts that are being discussed. There is a direct and conversational style in Jaijit Bhattacharya’s style of writing. For instance, in the chapter titled Urban Development Management System, he writes, “The objective of any urban development strategy is to create conditions which will make urban settlements economically vibrant. Resource constraint has to be overcome by adopting judicious investments. As resources are limited, instead of apportioning the available resources to all the cities and towns, the investments can be made in a set of select centres keeping in view the objectives of efficiency and balanced development of the region and the state as a whole.”

This is Jaijit Bhattacharya’s second book on e-Governance. His first co-authored book on e-Governance, “Government Online, Opportunities and Challenges,” had been released in the presence of the former President, Shri APJ Abdul Kalam. e-Gov 2.0 can also be seen as a book that picks of up from the point where Bhattacharya’s first book had left. This book is also about the evolution in the technological and political framework of e-Governance that is now taking place. Academics, policymakers, political leadership, industrialists and even private citizens can benefit from the book’s rigorous examination of e-Governance systems.

eWorld Forum 2011/ Urban Governance and Infrastructure by Dr. Jaijit Bhattacharya Part 1

Dr. Jaijit Bhattacharya's session on Urban Governance and Infrastructure Part 1

Dr. Jaijit Bhatacharya's session on Urban Governance and Infrastructure Part2