IT Taskforce
Basic Background  Report
(BR-2)
8th August 1998



XI. IT PRODUCT DEVELOPMENT

1. General Guidelines

i) Government and Societies at the Union and State Government levels would invite proposals from IT companies for development of products applications of use to the public, especially in public services and public domain information retrieval. (Canada and Singapore have such bodies and programs). The selected applications would receive development funding (part grant and part loan to be paid back as royalty to the government) if the companies cannot fund the development by themselves.

ii) Financial incentives should be given to promote in-house R&D. Creation of Computer Software Products and Packages should get R&D Benefits under Section 35(2AB) of the Income Tax Act.

iii) Emerging Information Technology Initiatives for the 21 st Century

• US, Japan & Europe initiatives analysed in terms of Government initiatives in pre-competitive R&D Programme abnormative action plan by Government of India and State Governments.

• Identification, formalization and promotion of Technology initiatives, abinitio, which are niches for India. e.g., Set-top-box, VSATs

(iv) So far, India has been projected as a potential software superpower. India should set its goal much further as the IT superpower. It should aim to be The #1 Provider of IT products to the World. As a subset to this vision and since software is already well received, the focus is to Transform India into the World's # 1 IT Design Centre by the year 2005.

Design today is the name of the game in the IT world. It covers the entire range of the IT industry-design of ICs, systems and peripherals, embedded software etc. Setting the wheels in motion to transform India into the IT design centre of the World will encourage manufacture of hardware products, provide employment at all levels and help balance and broaden the depth of India's IT enterprise.

The following action points may be considered:

For India to emerge as the #1 IT design Centre of the world, MAIT has made the following outline proposal:

• Leverage India's core competence: technically trained manpower with accepted skills

• less strain on infrastructure to start with

• Higher Value Addition Meets Global Shortage of skills

• Local success stories in hardware design- a precursor to shape of things to come

3. Computer Aided Design & Computer Integrated Manufacturing

The Department of Electronics has proposed the following:

1. Establishment of specialised knowledge centres in specific chosen area of VLSI design and related software.

2. Initiate 'India's Chip' programme with adequate 9th Plan allocation to support Indian equipment designer and system design houses which are designing VLSI chips and modules into their systems. This programme would include foundry support for small and medium scale industries similar to the one being provided by MOSIS programme in USA or CMP Programme in France.

3. Create a resource facility for IC prototyping and training and establishment of an Indian Institute for Semiconductors, with an adequate IX Plan allocation for this activity, would be Rs.150 crores.

4. The microelectronics industry in India has been stagnating for the past few years. In order to stimulate investment in this area a special package for this sector of industry needs to be prepared. In this regard, as it was recommended that microelectronics industry should be viewed as a strategic industry to attract major investment, the following is proposed:

i) The entire semiconductor manufacturing industry be treated as 100% EOU without any restriction on access to DTA and custom bonding formalities.

ii) The custom duty on all semiconductor devices be reduced to zero

iii) Excise duty on all semiconductor devices reduced to zero.

5. For optimal usage of meager R&D facilities and expertise available in the country there is a strong need to evolve a mechanism not only for complementing each other's effort but also to be able to initiate and undertake work in new product areas. A coordinating agency under the aegis of DOE with Members from R&D and user organisations could set up to undertake consolidation of the facilities already created and work out programme in a consortium mode.