'Obvious Areas Of Convergence'

Mr. Mayor, Mr. Vice Mayor, Chairman of the Shanghai Council for the Promotion of International Trade, Friends, 

I am happy to participate in this unique event, which focuses on an area of particular promise in India-China bilateral cooperation. It seems specially appropriate to hold this function in Shanghai, which is both a showcase of the economic transformation of China, and a hub of its technological development. 

We often say India and China are ancient civilizations. Both our countries have experienced colonial domination and external pressures in recent centuries. We commenced our independent existence, not very long ago, as poor and industrially backward countries. It should therefore be a matter of pride that our two developing countries are counted among the leaders in the cutting-edge technologies, which drive today’s knowledge economy. This has enabled us to accelerate our economic growth by compressing the intermediate stages in the development process. Technological upgradation and innovation is, therefore, a high priority area for India. 

The Indian I.T. industry – as we have just seen in the presentation – has been a major success story in this endeavour. The market capitalization of the Indian software industry has climbed steeply from 4 billion dollars in 1999 to about 50 billion dollars today. Our software exports are about 10 billion dollars. 

Apart from traditional on-site software development, Indian companies have also ventured into I.T.-enabled services like Call Centres, Medical transcription, data digitization, legal data-bases, and animation. More than 500 portals are being launched in India every month. Of 70 global software companies with the highest certification for quality control, 48 are Indian. One of our major I.T. firms has recently crossed 1 billion dollars in total revenues, and at least two other major firms are close to this impressive turnover figure. 

We are also aware of China’s impressive capabilities in information and communications technologies. China is one of the world leaders in computer hardware. The Chinese I.T. industry achieved a total volume of over 25 billion dollars last year in hardware alone. What is perhaps less well known is that China’s software industry has also been surging ahead. China is the third-largest market in the world for personal computers, and is expected to be in second position by 2005. By that time, sales of personal computers in the country are expected to reach 80 million. 

China’s internet-enabled population reached nearly 60 million persons last year. It is worth remembering that this is more than the entire population of several countries! The Dragon processor chip, China’s first indigenously produced computer chip, was also a technological achievement. 

While our hardware and communications infrastructure is also growing rapidly, we have much to learn from China in this area. 

In recent years, Indian business and industry have been strongly exploring the synergies with China in the knowledge-based technologies. An awareness gap between the industries in the two countries appears to have inhibited a more vigorous interaction. That is why events like this need to be commended. 

There are some obvious areas of convergence of commercial interest between India and China in this sector. 

It is self-evident that our respective core competence in hardware and software provides a natural ground for an effective alliance in the I.T. industry

The profiles of our respective software industries are also complementary. While in China, the predominant focus is on products, the Indian software industry focuses more on contract services and solutions. 

The strong international brand recognition of Indian IT firms is an asset that can enrich an India-China IT partnership. The higher end of the value chain is a niche that even multinational firms have not explored in the Chinese market. 

Both our countries face the challenge of a ‘digital divide’ from regional imbalances in access to technologies. India has launched an ambitious programme to ensure ‘I.T. for all’ by 2008 with a major national campaign for universalising I.T.-based education at all levels of the education pyramid. We have conducted innovative experiments at the community level using low cost computing, home networking solutions, more efficient use of the internet bandwidth and e-marketing. With a similar diversity of regional educational and social patterns, China would also have collected experiences which may be relevant to us. A sharing of experiences in this important objective could help to develop better strategies in both countries to bridge the digital divide. 

There is another potential strategic gain from an India-China partnership in I.T. We know that technological advantage can be sustained only with intensive research and continuous innovation. If countries like India and China were to concentrate on specific areas of their technological advantage, they could benefit far more than by competing across the spectrum. In combination, rather than in competition, Indian and Chinese I.T. industries can be a potent force. This is a principle which has far wider application in South-South cooperation. 

The Olympic Games in Beijing in 2008 could provide a good opportunity for Indian and Chinese I.T. firms to work together. Our experience has shown that in mega events like these, a substantial proportion of the contracts awarded in the I.T. sector are actually sub-contracted to Indian firms by contractors from the developed countries. Indian and Chinese firms could instead join up to provide state-of-the art solutions at cost effective prices, thereby also cutting out the middlemen. We could even think of a joint institutional mechanism between the two governments which could see whether modalities could be worked out for this. 

India has a national e-governance programme seeking to link grassroots public services with those at the macro level. Here again, India and China can share experiences in optimizing our e-governance systems. 

One of the main objectives of my visit to China is to impart a fresh momentum to the comprehensive bilateral cooperation which India and China are seeking to build. The most significant decision in this direction was the agreement by the two Prime Ministers to set up a Joint Study Group to recommend to the governments concrete measures for boosting our trade and economic cooperation over a short to medium term time frame. If our economic cooperation is to break out of the present traditional mould, knowledge-based technologies need to occupy a far more prominent position in our economic interactions. I believe the discussions today would illustrate the tremendous scope. The two governments can only give policy and infrastructural support to this endeavour. Indian and Chinese business and industry have to take up this challenge.