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Priya Ganapati in Bombay

The National Taskforce on Information Technology and Software Development has announced a 12-member panel to rescue India's besieged IT hardware industry.

The sector of the economy is finding that its manufacturing operations are becoming less and less viable. The immediate cause of this is the fantastic price advantage that the small assembler-vendors gain. The grey market operators, as they are known, cut costs by not spending on branding. At the higher end, the global brands are making hay as import barriers have steadily fallen over the years.

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Manu Parpia, former president of the Manufacturers Association for Information Technology, laments "The hardware sector in the country has a share of just 0.1 per cent in the global market. And that too is fast disappearing."

The government has finally decided to sit up and take notice. N Seshagiri, director, National Informatics Centre, who is also the convenor of the hardware panel, declares "The heat is on."

The panel comprises:
N Seshagiri, director, National Informatics Centre;
Ravindra Gupta, secretary, Department of Electronics;
Montek Singh Ahluwalia, finance secretary;
R Prabhu, former commerce secretary;
Manu Parpia, ex-president, MAIT;
Ram Agarwal, Wipro Peripherals;
Ajai Chowdhury, HCL corporation;
Gopal Srinivasan, TVS electronics;
Om Wadhwa, JT electronics;
Inderdeep Singh, president, Electronic Components Association;
The chairman of the Central Board of Direct Taxes and
The chairman of the Central Board of Excise and Customs.

IT Taskforce spokesperson Dewang Mehta justifies the choice of members on the panel. "We have selected people who matter both in the government and the hardware industry. Although there has not been a great amount of exports from the hardware sector till now, the fact that we have set up a panel shows that we want to change this."

Seshagiri explains the groundwork done by the taskforce before it decided to set up a panel. He said "We had dozens of meetings with various industry bodies like MAIT, EESA and the Peripherals Association in Bangalore. We also met a large number of people from the hardware industry and then decided to form a panel."

The PC penetration in the country is one of the lowest in the world. A recent study by the International Data Corporation showed that India has a PC penetration of just 2 for every 1,000 of the population. Even China fares better with 6 PCs for every 1,000 of the population.

These figures are symptomatic of the problems that plague the hardware sector. The branded PC manufacturers in the country face stiff competition from the grey market that threatens to capture over 90 per cent of the home PC market in less than three years.

Seshagiri reveals the hardware panel's strategy that promises to change all this. "The primary thing is if you are going to have a zero duty regime how should the hardware industry reorient itself to bring about economies of scale. We are going to look into how production targets can be met and how exports of hardware can reach a target of $10 billion by 2005."

He is determined that the lot of the hardware sector in the country improves. "We want to see that the hardware industry in the country enters the big league or not at all. You see, in the global hardware market, you have to be among the dominant players," he emphasises.

When Rediff challenged why the problems of the hardware sector did not find answers in the first report of the Taskforce, Seshagiri said, "The first report of the Taskforce was intentionally intended to be for software and telecom. We did have ideas for the hardware sector but soon realised that the types of problems in this area are different. Matters relating to the hardware industry are so complex. I can say that issues pertaining to the software industry are only half as complex as the hardware sector."

Mehta is confident that the panel would give its recommendations to the taskforce in about three weeks.

Seshagiri is even surer. "We should give our report in the next 10 to 12 days. So, it would generally be out by the last week of August. The processing of the recommendations would take another 10 days."

Yet, surprisingly, the panel has not met since the announcement. Nor has a date been set for the first meeting.

Seshagiri, however, remains optimistic: "I am working hard on this report. We will soon work out a draft that will detail the problems faced by the hardware sector."

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