A meeting of the National Task Force
on Information Technology and Software Development was held under the chairmanship of Shri
N. Chandrababu Naidu, Chief Minister of Andhra Pradesh and Co-Chairperson of the National
Task Force, on 21 November 1998 at Hyderabad. The list of participants in the meeting is
enclosed as Annexure-I.
The Member Convener of the National Task Force,
presented an outline of the recommendations of the Special Group on Micro Electronics in
its meeting held on 7th September 1998 under the chairmanship of Secretary,
Department of Electronics, at Electronics Niketan, CGO Complex, New Delhi. He outlined the
policy package for setting up of Megafabs as an S-BIT Zone. Megafabs in the present
circumstances have become a necessity for strategic and commercial reasons. He further
outlined the set of incentives that the Special Group had recommended and strongly urged
the Task Force to approve the same for placing before the Government. Member Convener also
outlined the recommendations on R&D and Manpower Development suggested by the Special
Professor P.V. Indiresan enquired as to why the
Department of Electronics was suggested for the new Megafab when the Semiconductor Complex
Limited is already there under the Department of Electronics.
Dr. A.K. Chakravarti representing the Secretary,
Department of Electronics mentioned that a corpus fund of Rs. 4000 crores was suggested by
the Task Force Special Group. He advocated the reasons for locating the corpus fund under
the Department of Electronics.
Professor Indiresan pointed out that 80 percent of
the semiconductor manufacturing plants in Taiwan is now lying idle. Therefore, the
possibility of any of the domino companies setting up a new facility in India at this
point in time is somewhat remote. Though as a policy, the Task Force would prefer to have
competition among the aspirants, the large size required for economy of scale does not
permit several Megafabs to be set up in the country at this stage of IT development. The
Member Convener clarified that there are Midifabs in Bharat Electronics Limited (BEL)
under the Ministry of Defence, Semiconductor Complex Limited (SCL) under the Department of
Electronics and Indian Telephone Industries (ITI) under the Ministry of Communication. BEL
is already planning to set up a Megafab by purchasing in auction an existing plant from
abroad which is undergoing liquidation, even though technologically the know-how is
contemporary. This plant is likely to cost between Rs. 800 crores and Rs. 1000 crores. The
Department of Electronics has already invested a few hundred crores of Rupees to re-set up
the Semiconductor Complex Limited whose main plants got gutted in a devastating fire
several years ago. A typical contemporary new Megafab which can bring internationally
competitive products, would cost around Rs. 2500 crores. The discussions and negotiations
with Multinationals like Intel, AMD, Cyrix, and others, have not been fruitful so far,
because, they have pointed to inadequate infrastructure of international standards in
Professor Indiresan strongly advocated that such a
plant should be set up outside the Government; perhaps under a separate Department.
Lt. Gen. S.S. Mehta pointed out that in this field
many companies are winding up. We may not be able to justify more than one or two Megafabs
at this point in time. It is essential to assess the total capacity and Spec. immediately.
Member Convener observed that the glut-scarcity cycle is becoming shorter and shorter in
the duration of the cycle. Therefore, we cannot go on the basis of a glut at this point in
time, because very soon, the scarcity faced in the cycle will surely come up in the near
future. Therefore, even two Megafabs may be justified for a country like India which is
very large and with high stakes. Strategic reasons alone can justify the setting up of a
Megafab. Sanctions and the like are aggravating the situation. In this background, the
consideration of setting up of Megafabs cannot be on the basis of pure economic viability
alone. There is also a strategic angle from the point of view of security and
sustainability of our IT growth.
Shri Dewang Mehta emphasized that Government's
spending should justify economic viability except for over-riding strategic reasons.
Shri Anil Bakht asked why do we think only in terms
of US partners in such strategic ventures: Why should we not think of other countries like
France who have similar technologies?
Professor Indiresan advocated the view that if
private investment is forthcoming, then we need not have to put a restriction on the
number of units. However, if the Government investment is involved, then we have to
project only strategic requirements, if commercial viability has not been fully
established. Government investments should be viewed in terms of civilian and military
requirements put together so as to derive higher economy of scale. He mentioned that even
France is afraid of USA and may tend to keep such transactions outside the purview of
CoCom regulations wherever possible. With the current Sanctions of USA and some of the
CoCom countries, the super computer project 'Anurag' cannot get even advanced
Lt. Gen. Mehta informed that BEL has already started
negotiations in acquiring a Megafab. We have to determine what products constitutes
strategic. With Cyber wars, there can be no peace. If encryption does not belong to our
country, then we have to face a strategic threat. There are devices like the Trojan Horse
which can be activated by original manufacturers as and when they want. Larger interest of
the country would then require that we develop the ability to make changes in the Megafab
set up. Even control of designing encryption algorithm and embedding them into a computer
should be within the country. Otherwise, there will be a strategic threat.
Professor Indiresan recommended that while both
defence and civilian should be treated as strategic, commercial possibilities are only in
the nature of an extended application of the Megafabs.
Shri Anil Kumar pointed out that the setting up of a
Megafab at ITI should also be considered. Strategic requirements does not necessarily
imply defence PSUs only.
Dr. Seshagiri clarified that both ITI and SCL are
Midifabs. However, they may be revamped into Megafabs with difference investments.
Commodore Prem Chand felt that large private
investment is a must in setting up of Megafabs. Indirect subsidies can be given by the
Government to the private sector through the setting up of international standard quality
infrastructure as was done in Malaysia.
Shri Dewang Mehta advocated that just like
'Operation Flood' or 'Operation Green', we should set up 'Operation IT' as a national
venture for which Government's strategic initiatives are necessary.
Professor Indiresan asked whether SCL can be
replicated without imports, for which indigenisation of capital equipment will become
necessary. Instead of incremental strategies, can micro electronics be grown like Dr. Homi
Bhabha grew the Atomic Energy or Dr. Vikram Sarabhai grew the Space Programme in India. He
suggested that a small Technical Committee may examine this possibility.
Dr. Seshagiri mentioned that Gen. Mehta and
Commodore Prem Chand have given a three-point proposal for inclusion in the Strategic
Report of the Task Force. These generic policy guidelines have the necessary guidelines
for setting up projects like what Professor Indiresan suggested.
Dr. A.K. Chakravarti representing the Secretary,
Department of Electronics, emphasized the importance of Software embedded in Hardware. Dr.
Seshagiri pointed that the Special Group under the chairmanship of Secretary, Department
of Electronics was concerned with the setting up of Megafabs. However, a new trend is
growing worldwide in setting up of Minifabs for ASIC Chip, FPGA Chip, etc. which cost in
the range between Rs. 60 crores and Rs. 150 crores. There is considerable scope for
setting up of a number of such Minifabs both in the public domain and in the private
sector. India has a large stake in the design and manufacture of ASIC and FPGA, because,
the economy of scale of production of these very well matches the demands that are coming
up from within the Indian market. He then suggested that in addition to the suggestion
made by the Special Group, he will work out a policy strategy for spreading a number of
Minifabs in the country with minimal Government investment.
Shri R.S. Pawar diagnosed two possible paths: one as
a structured approach to the setting up of Megafabs and a commercially viable approach for
the setting up of Minifabs pointed out by Dr. Seshagiri. Such Units may be required to be
subsidised by the Government for some time until commercial viability gets established.
Professor Indiresan suggested that we may consider purchase clout as a means for setting
up of Minifabs. The entrepreneurs who want to set up Minifabs can be given certain
guaranteed markets for sometime instead of giving explicit subsidies. For this, the
purchase clout of DOT and Defence can play an important role.
Dr. Seshagiri pointed out that on pages 2 and 3 of
the Report of the Special Group on Micro Electronics, a number of tax and duty incentives
have been suggested for bringing conditions matching Malaysia. As the most advantageous
structure for setting up of these Fabs would be the S-BIT Units/Zone, all the incentives
already recommended for the S-BIT Unit/Zone should be equally applicable to the Micro
Electronics Units also. Some of the other types of incentives which are not covered under
the S-BIT Scheme, should be recommended as additional types of incentives over the S-BIT
Shri Anil Bakht advocated the approach of suction by
demand as a major thrust instead of direct subsidies. Promotional subsidy could then be
considered only for creation of such demands.
Dr.Chakravarti referred to the letter of Dr. U.P.
Phadke of the Department of Electronics to the Member Convener of the Task Force dated
25-9-98 pointing out certain corrections. Dr. Seshagiri pointed out that all these
corrections are acceptable, except that the Task Force has to take a special decision as
to the administration of the the corpus fund of Rs. 4000 crores recommended keeping in
view the comments and suggestions made by Professor Indiresan. He pointed out that this
amount would include Rs. 800 crores to Rs. 1000 crores required for creation of Megafab by
BEL through the budget of the Ministry of Defence. There are other related projects like
the setting up of CAD Centres in a number of organisations, augmentation of ITI facility
through the budget of the Ministry of Communications, etc. Even on the aspect of ab-initio
setting up of one new Megafab at Rs. 2500 crores, the public investment and private
investment should be separated. For clarifying this, a break-up of the amount should be
given in detail along with implementation strategies for consideration of the Task Force.
Shri Anil Kumar suggested that the Para 11 of the
Insitutional Mechanisms, should be carefully reworked out and elaborated to give better
On para 9 of the Report of the Special Group, it was
clarified that the reference to IIIT does not mean that the entire IIIT will be dedicated
only to Micro Electronics. It should be clarified that a IIIT will be set up in which one
of the main specialisations will be Micro Electronics along with the setting up of an
international class laboratory.
Member Convener outlined the work of the Study Group
on Vidyarthi/Shikshak/School Computer Scheme. The background material for the work of the
Study Group was circulated to all the members of the Task Force.
Shri R.S. Pawar noted that providing a low cost
computer is the last thing. What comes first is the organization required for support,
maintenance and training. Member Convener announced that negotiations so far have brought
down the cost of a Multimedia Computer to about Rs. 20,000 for the hardware and a Software
suite costing Rs. 5000 or less (i.e., one tenth the market price) is under discussion. He
noted that the work of the Study Group is not yet complete and that a few more meetings
In the Afternoon Session, the Co-Chairperson of the
National Task Force, Shri N. Chandrababu Naidu, Chief Minister of Andhra Pradesh, gave a
detailed presentation on the vision and plans for the growth of IT in Andhra Pradesh. He
outlined the strategies of Andhra Pradesh Government in IT Education, IT in Government, IT
Infrastructure and IT in Private Sector. Details of the presentation are given in
In addition, he outlined the plan for using TV as a
channel for 1-10th Standards as part of Distance Education Programme covering
such areas as Agriculture and Self-help programmes. Set-top-boxes over TV give Internet
linkage to the School at a much lower cost. As an example of the impact of IT, he pointed
out his traditional Monday Programme called, 'Dial your CM' broadcast throughout the State
and the feed-back received are answered over the Television. The Cable TV network has now
spread to 176 towns with Municipalities/Panchayats covered by a CCTV Camera for
facilitating question and answers.
He advocated to the Task Force laying emphasis on
value added network services for the benefit of the common man. Some of the applications
are commercial taxes, registration, transport and utilities.
The Co-Chairperson had organised an Audio
Teleconferencing with Dr. V.S. Arunachalam and Dr. Raj Reddy of Carnegie Mellon University
at Pittsburgh, USA to enable the Task Force to discuss with them the IUNet-Sankhyavahini
Mission. This Mission was recommended in an earlier meeting of the Task Force under the
chairmanship of Shri Chandrababu Naidu, Co-Chairperson, on September 5, 1998 held at
Andhra Pradesh Bhavan, New Delhi and subsequently approved by the Deputy Chairman,
Planning Commission and Chairperson of the Task Force. Subsequently, the Department of
Telecommunications signed a Memorandum of Understanding with Carnegie Mellon University
for the setting up of a high sped National Internet Data Backbone of band-width 2.5 Gbps -
10 Gbps range. The details of the Sankhyavahini Mission is enclosed at Annexure-III. The
original proposal of Dr. Arunachalam and Dr. Raj Reddy is enclosed at Annexure-IV. A copy
of the MOU signed between DOT and Carnegie Mellon University is enclosed at Annexure-V.
Member Convener outlined the agenda on Framework
Contracts. He said that some of the Task Force Members as well as some of the articles in
the media have repeatedly asked for more information about the Framework Contracts. It was
clarified that Policy No. 89 in the Gazette of India No. 160 dated July 25, 1998, is based
on the text of what the Chief Minister of Andhra Pradesh had given as part of his
Submission Paper on the National Informatics Policy placed for consideration of the Prime
Minister on 22nd May 1998. A similar system of Framework Contracts was also
recommended by the Vittal Committee on Government Computerisation. This system is on the
lines of CCTA of the Government of UK which has been successfully in operation for nearly
two decades. The Framework Contracts of CCTA in UK currently cover 8 major service
categories. It was clarified that the recommended organisations in India will follow the
same pattern. Professor Indiresan clarified that the only concern expressed by some of the
members of the Task Force was that such service organisations should not be exclusive.
Shri T.H. Chowdary pointed out that Policy No. 89 in the Gazette of India, dated 25 July
1998 clearly states that the service organisations shall establish Framework Contracts 'on
a non-exclusive basis'. The system of CCTA of UK is so designed that it respects equity
and fairness in a competitive supply situation in a market economy. For purposes of giving
full information on this, Member Convener circulated pages 5 and 6 of the Report prepared
by the Office of the Chief Minister of Andhra Pradesh, the CCTA Service Catalogue and a
copy of the full brochure of CCTA of the Government of UK. (Copy enclosed at Annexure-VI).