If US orders stop, India's IT can count on the political class to bail it out

The push for ?Digital India? and a digital economy is going to act as the safety valve for the IT industry in case the American dream falls apart Photograph:( Others )

Noida, Uttar Pradesh, India Feb 20, 2017, 11.11 AM (IST) Tathagata Bhattacharya

Last week's three-day Nasscom Leadership Forum actually had a funny start with key speaker Mukesh Ambani saying Trump’s protectionist measures could be a boon in disguise for India’s IT companies. In a way, it is ironic that the point of view of the very organiser of the forum has been put through a shredder.

 

“The domestic IT industry can focus on solving problems right here, which is a huge market,” India’s richest man told the gathering. Nasscom has already lowered its revenue growth estimate for the industry to 8-10 per cent from the 10-12 per cent figure it had predicted last February.

 

More than 65 per cent of the Indian IT industry’s $155 billion revenue comes from the US. But then, why is Mukesh Ambani so hopeful?

 

I have tried my best to find a logical reason behind this and, frankly speaking, I do not see India’s private sector to have work or the purse to meet a $100 billion shortfall if push comes to shove.

 

However, India’s Unique Identification (UID) project, more commonly known to Indians as the Aadhar programme, and Ambani’s “solving problems” quip may act as pointers as to how the Indian IT industry may survive if the American and post-Brexit European workflow takes a nosedive. 

 

For this, one has to take note of the unbroken continuity of the fundamental economic roadmap that the country has embarked upon for the last decade or so. In this light, the policies of the ruling BJP government led by Prime Minister Narendra Modi do not really differ with those of the previous UPA government that was headed by Manmohan Singh.

 

While Modi has been widely panned by critics for his proximity to big businesses and the alleged largesse the latter have enjoyed from this relationship, I think the 2010 Budget speech in Parliament delivered by then finance minister Pranab Mukherjee, who is now the President of the country, has not received enough scrutiny.

 

The part of the speech that I refer to above reads: “With development and economic reforms, the focus of economic activity has shifted towards the non-governmental actors, bringing into sharper focus the role of government as an enabler. An enabling government does not try to deliver directly to the citizens everything that they need. Instead it creates an enabling ethos so that individual enterprise and creativity can flourish.”

 

The outsourcing of Project Aadhar was possibly the first step towards realisation of this plan. Various private companies collected biometric data of residents of India. It was originally supposed to do away with multiple identity silos and duplication of cost and efforts. Its stated purpose was to make life easier for the Indian people, as Nandan Nilekani, former chairman of the Unique Identification Authority of India (UIDAI), told me in an interview way back in 2010.

 

The project rolled over questions pertaining to infringement of civil liberties, encroachment into personal space and the lack of data protection laws such as the United States Federal Privacy Statute or the European Directive on Data Protection. It was argued that lack of identity was the central roadblock that impeded the poor and the marginalised’s access to benefits and subsidies.

 

Seven years down, the project has already cost the country Rs 8277.17 crore ($1.24 billion) in cumulative expenditure and, instead of doing away with duplication of cost and efforts, has added yet another identity silo. And a look at the cost break-up will tell anyone who has gained most from the programme.

 

If farmers’ suicide figures are any indicator, India’s poor have not benefitted from Project Aadhar.

On the other hand, Aadhar has helped Reliance’s Jio to add a million subscribers a day, as mentioned by Ambani at the Assocham meet.

I have a strong feeling that the push for “Digital India” and a digital economy is going to act as the safety valve for the IT industry in case the American dream falls apart. If not, it is going to add substantial revenue to the balance sheet. Only around 35 per cent of Indians had access to the Internet till 2016.

 

That leaves plenty of avenues in terms of setting up and upgrade of infrastructure, setting up backends and training the vast mass who have lived on the dark side of the digital divide.

 

Whether that comes in the form of private-public partnership or simply outsourced contracts or a mix of both is for time to tell. But it is clear that in crucial areas of deliverance that affects real people, the government has taken a clear backseat, creating an enabling atmosphere for corporate takeover.

 

In this light, Mukesh Ambani’s optimism is clearly not misplaced but calibrated on the symbiotic relationship between India’s political class and the industry.

 

 

Tathagata Bhattacharya

Tathagata Bhattacharya is Editor at WION digital (Web and Mobile). He is as enthused by newsbreaks as he is by jazz, single malt, mountains and literature.