IT Taskforce
Taskforce Diary

Minutes of the meeting of the
National Task Force on Information Technology and Software Development
held under the chairmanship of
Shri N. Chandrababu Naidu,
Chief Minister of Andhra Pradesh
Co-Chairperson of the National Task Force.

Venue  :  Office of the Chief Minister, Andhra Pradesh Secretarit, Hyderabad.
Date    :  21 November 1998

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 Group.

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 India.

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 chips/Pentiums.

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 Scheme.

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 clarity.

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 are scheduled.

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 Annexure-II.

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).


  • Annexure I :
    List of participants in the meeting of the National Task Force on Information Technology and Software Development held on 21 November 1998 at Hyderabd

  • Annexure II :
    An Odyssey into the future

  • Annexure III:
    IU Net – Sankhya Vahini - A Status    Report

  • Annexure IV:
    A National High Speed Inter-University Data Network for India - SANKHYA VAHINI

  • Annexure V :
    Memorandum Of Understanding between IUNET INC(USA) And Department of Telecommunications, Government of India

  • Annexure VI :
    Chief Minister’s Office

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