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December 24, 1999


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Chennai challenger

George Iype in Madras

Once seen as a chaser, Madras's infotech industry is beginning to look like a gainer now, causing some concern in Bangalore or Hyderbad, according to recent surveys.

Email this story to a friend. A recent study by Dun & Bradstreet identified Madras as the "ideal locality" for software projects. And a similar survey conducted by the National Association of Software and Service Companies had stated that Tamil Nadu was the most sought-after IT destination in India.

Already Wipro, Alcatel, Pentafour, L&T, Tata Consultancy Services, Singapore Airlines, Infosys, Satyam and Citibank have set up their new software facilities in Madras.

Tamil Nadu government officials claim that the shift owes much to the new vibrant infotech policies, primarily intended to attract software giants. The state's infotech drive gathered momentum soon after neighbouring Andhra Pradesh -- headed by the IT-savvy Chief Minister N Chandrababu Naidu -- making its mark in the field.

Tamil Nadu's metamorphosis has been dramatic in the last few years. The state accounted for just Rs 3.6 billion worth of software exports in 1994-95. In 1998-999 they touched Rs 12.46 billion. Going by rcent government figures, nearly 75 per cent of software exports from Tamil Nadu go to the United States.

Two years ago, there were less than 90 software companies in Tamil Nadu. Today, there are 153. And 20 of these companies belong either to global software leaders or their subsidiaries.

Many reasons are offered for Tamil Nadu's sudden rise as a software power.

"Availability of highly skilled manpower is the first and foremost reason why Tamil Nadu is attracting the maximum number of infotech companies in the country," says Pentafour Software and Exports Limited chairman and managing director V Chandrasekaran.

"Every year, some 32,200 engineers come out of more than 100 engineering colleges in Tamil Nadu. Students in Tamil Nadu are proficient in mathematics, which helps them become brilliant computer engineers," he told

Last year, the M Karunanidhi government drew up a new policy to encourage and accelerate the growth of the infotech industry in the state.

The policy hoped to increase both domestic and export earnings in the industry in the state, and to upgrade and develop manpower skills by facilitating training and to accelerate the use of IT in educational institutions to ensure the youth have the knowledge necessary for employment in this sector. Finally, it hopes to upgrade the quality of life of those within the state by improving access to information technology.

State Minister for Education K Anbazhagan, who is actively involved in implementing the new IT policy, one reason for Tamil Nadu's remarkable performance is: "We have created basic infrastructure for attracting global software giants.

"We are now wiring up schools with computers, setting up government intranets and public service web sites, starting specialised infotech training institutes, networking all districts and government departments and boosting local language software and content," he told

He said that the availability of skilled and educated manpower, comparatively higher standard of educational institutions, sound infrastructure and lower costs of operation have helped the state become an "IT leader".

He also highlighted the encouragement the state provided to the private sector to set up IT parks. These included wide-ranging concessions, including their being considered on par with industrial estates promoted by governmental agencies.

The government had relaxed floor space index by 50 per cent in metropolitan areas and set up a Rs 1 billion IT venture capital fund supported by Tidco, ILF&S and the Commonwealth Development Fund.

Now IT parks are coming up in places like Coimbatore, Trichy and Madurai. These IT parks will have full-fledged facilities for software development as well as special sites with less pollution for hardware units, and locations commercial and residential areas, schools, convention and business centres. Connectivity required for communication and information exchange globally is also to be provided.

IT companies in Tamil Nadu have also been exempted from power cuts imposed by the state electricity board, since they are treated on par with 100 per cent export-oriented units.

The new policy ensures that there is no system of entry tax or purchase tax in Tamil Nadu for IT industry. Software companies enjoy unrestricted movement of capital equipment, including hardware, peripherals, captive power gensets, UPS sets and telephone exchanges, subject only to sales tax.

Information about 32 departments has also been made available on the Internet. It offers a series of information services for citizens, including economic and general information of public interest such as district profiles and applications for various essential services like telephone connections and passports.

Shankar Menon, a leading IT consultant in Madras, says there is still potential for enormous growth.

"With IT penetrating all spheres, including government departments, educational institutions, banking, shopping, entertainment and even consumer applications, lifestyles across the state are in for dramatic changes," he gushed.

As per the government projections, IT revenueds in Tamil Nadu will be of the order of Rs 130 billion by 2001-2002.

Chief Minister M Karunanidhi recently set up a high-power committee. headed by the state finance secretary, to bring IT into all government departments in a phased manner. A separate policy paper is soon expected to ensure speedy implementation.

The new policy will facilitate the setting up of a T-Net, an information backbone connecting all district headquarters, using cable networks in the state. Cable television penetration is four times that of telephone lines.

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