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October 15, 1997


Who's afraid of Chandrababu Naidu?

India's digital Mecca of Bangalore, or more precisely the state of Karnataka, is under siege as neighbouring Andhra Pradesh is competing fiercely to attract the limited capital for the information technology industry.

At the National Association of Software and Service Companies' annual jamboree in Bangalore recently, it was Andhra Pradesh Chief Minister N Chandrababu Naidu who stole the show with his grand plans for the IT industry.

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The local industry is now warning the Karnataka government of a flight of capital from Bangalore and elsewhere in the state.

Paranoia? The Karnataka government, at least, does not think so. It has already dispatched a senior officer to Andhra Pradesh's capital Hyderabad to check on Naidu's work at Madhapur, where he is building a grand information technology park called Hitech City.

In the meantime, Karnataka's industry would prefer to peg its discontent on the delay in the implementation of the state's information technology policy, announced on June 9.

"There are bits and pieces here and there, but there is no central force driving the policy," an industry source complained. "What we need is a driver to implement the policy. The presence of a government secretary for IT will move the files."

The creation of an IT secretary's office has been the one major demand of the industry which has not been granted. Industry sources argue that the IT policy can be implemented only if there are government officers solely responsible for it.

According to senior government sources, the file to create the IT secretary's office is lying with the chief secretary. They allege that there is an impression within the Vidhana Soudha, the state secretariat, that there are already two secretaries who are involved with industry and there is no need to create yet another, especially for IT.

A government source gave credence to the view when he said the IT industry's demand for a secretary stems from their need to have a 'figurehead' in the government and that there is no real administrative need for one.

Or is the need of Karnataka's IT industry more than just that of a figurehead? Is it wanting to emulate Andhra Pradesh where Naidu has scored once again by appointing an IAS officer to oversee IT policies?

Karnataka's technocrats have another grouse. The state's IT policy has envisaged computerisation of government departments but there is no sign of any comprehensive action plan yet.

Only some departments like the Bangalore Municipal Corporation, the Karnataka State Finance Corporation, the Planning Department and the Karnataka Electricity Board have made random announcements about computerisation.

Government sources point out that infusing computer awareness at all government levels cannot happen overnight.

The Karnataka industry is also nagging the government on the delay in setting up the Indian Institute of Information Technology. This is the education project in which the government has proposed to invest Rs 100 million this year and another Rs 100 million next year.

Across the border in Andhra Pradesh, Naidu is faring better on this front too. He has already identified land and got a few industries interested in setting up 'centres of excellence'.

Karnataka government sources say "We had asked the industry to identify land. They have not come up with anything yet. If we have to invest Rs 100 million it will take time. It has to go for cabinet clearance. What we have suggested to the industry is that we will offer the land if they will invest in the institute. But till date, nobody has come forward on the proposition."

Government sources claim that complete implementation of the IT policy cannot happen overnight but point out that the document has already hastened tax concessions for the industry. "Within 15 days we issued a notification for sales tax concessions promised in the IT policy," a Karnataka government officer said.

A task force to implement the policy has been set up and has already met twice. It has as its chairman the principal secretary to the Karnataka government and 20 members, which include, besides several secretaries from different government departments, the chairman and managing director of software major Infosys, the president of NASSCOM, the president of the Manufacturers' Association for Information Technology, the CGM of the Department of Telecommunications, the resident chief of the National Institute of Information Technology and the chairman and managing director of Keonics.

The task force has to submit its recommendations within three months. It will take up issues concerning development models to be adopted to speed up growth of IT industry in the state, identify potential locations for establishment of additional 'electronics cities' and 'software technology parks', assess the requirement of manpower for various categories during the Ninth Five Year Plan period, suggest introduction of new courses in academic and training institutions; and examine the existing syllabi and curricula in academic and training institutions.

Karnataka's IT policy comprises, besides fiscal incentives such as entry tax exemption, purchase tax exemption on computer hardware and sales tax exemption for 10 years; the creation of a pool of software engineers to meet the demand-supply gap of nearly 10,000 engineers needed annually; software parks at Mysore, Mangalore and Dharwad; Electronics City II near the first one in Bangalore and at Mysore, Mangalore and Dharwad; a Videsh Sanchar Nigam Limited Internet gateway and training centres in districts and setting up internationally recognised quality certification such as ISO 9000 and SEI certification.

However, the Naidu bogie need not unnecessarily cause sleepless nights in Karnataka yet. Let's look at the figures: Andhra Pradesh's IT industry turnover was of about Rs 1.2 billion, which it hopes to increase to Rs 2 billion. Karnataka had a turnover of about Rs 12 billion which it hopes to increase to Rs 20 billion this year. Karnataka is almost 20 times ahead!

The pool of talented and skilled software engineers in Bangalore may not be easily coaxed to move to Hyderabad. But the competitive spirit between the states may lead to a tax-cut war. And that's good news for any business.

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