INDIA’S REGULATION RAJ: THEN AND NOW
Previously, licences and regulations were required to run businesses in the country
AThe almost miraculous success story of India’s rise as a computer and software power has been told many times over, from different points of view. Famous accounts such as Thomas Friedman’s The World is Flat (2015) are still worth rereading.
ccording to Government of India’s Economic Survey for 2020-2021 released earlier this year, Indian software exports grew by 21.6 per cent in Q4, surpassing pre-pandemic levels. India’s Information Technology and Business Process Management service exports amount to $194 billion, employing millions of highly skilled personnel and support staff. Not only does this sector account for nearly 50 per cent of India’s total exports of $418 billion, but also attracts 54 per cent of the Foreign Direct Investment (FDI) in the country, amounting to over $16 billion. Today, we take it for granted that India is one of the top countries in the world in software manufacturing and exports, next probably only to the United States.
This was not always the case. In his recently released book, The Maverick Effect: The Inside Story of India’s IT Revolution, the founding Chairman of the National Association of Software and Service Companies (NASSCOM), Harish Mehta, recalls what now seems like an amusing incident from the 1980s. As a software exporter, Mehta had to seek customs clearances. The concerned officer “told me that I needed to leave samples of what I was exporting with him. I was forced to leave the floppy disk of the software with him. The diligent officer immediately planted a stapler pin through the floppy disk and attached it to the form, thereby destroying the media and rendering it unreadable.”
The deadly ignorance, coupled with bureaucratic intransigence, was typical of the times. Though, in retrospect, it is not at all clear what the government, with its gigantic and gargantuan “licence-quota-permit” raj was trying to prevent and why. All that it succeeded in doing was strangulating India’s growth and productivity, keeping a large section of the populace below the poverty line.
The almost miraculous success story of India’s rise as a computer and software power has been told many times over, from different points of view. Famous accounts such as Thomas Friedman’s The World is Flat (2015) are still worth rereading. But those who lived through the dark ages will aver that India’s IT and software revolution was not because but in spite of the government.
Cyber guru
There were hardly any computer science degrees on offer those days. Worse, coding was not taught at universities or colleges in the country. Programmers were trained in private teaching shops, which had mushroomed all over the country. One of the “cyber gurus” of that time, Vijay Mukhi, is also celebrated in Mehta’s book.
Mehta began attending meetings at Mukhi’s home, which was “brimming with entrepreneurs in the technology business.” Many would vent, gripe, and share grievances about government apathy and bureaucratic blindness. The meetings evolved into change-making bodies such as the Bombay Computer Club, NASSCOM, and The Indus Entrepreneurs (TiE).
Mukhi, with his inveterate curiosity and adaptability, ran a Computer Institute, training programmers. Mukhi’s headline grabbing moment was his “cyber-wedding” during which his bride and he did their “pheras” or wedding rituals on the internet, with the support of the now-defunct Videsh Sanchar Nigam Limited (VSNL). This symbolic assertion of the power of the web was, according to Mehta, the “wow” moment that not only illustrated the power of technology, but converted many to the new world of tech. Mukhi passed away in 2018 at 61.
Luckily, for us, when it comes to India’s great tech leap forward, many pioneers and still key players from N R Narayana Murthy (Infosys), Azeem Premji (Wipro), Shiv Nadar and Ajai Chowdhry (HCL), Rajendra S. Pawar and Vijay K. Thadani (NIIT), and several notable others, are still with us. They have borne witness to the entire era that Mehta’s book covers.
I cannot help recalling my own encounter of the worst kind with the horrors of Indian regulation and bureaucratic authorities. As a young PhD from the US, I returned to India in January 1986, carrying with me an early version of a laptop. It wasn’t a laptop, in fact, but a compressed and portable desktop, with one floppy drive. I was told by the Indian Embassy in Washington, D.C., that as per the new ease in customs norms by then Prime Minister Rajiv Gandhi’s government, returning expats with higher degrees could import computers duty free to India. Not so, I realised with dismay and desperation at the Mumbai (then Bombay) international airport. I had declared the computer, dutifully thinking I was exempt, the officer on duty “confiscated” after I said I could not afford to pay 100 per cent duty. I said I had just finished my PhD and the computer was not for business but for my academic work. He said, “What do you need a computer for? Go read a book!” Sadly, I never got my computer back, though I wrote futile letters to the highest authorities of the land.
Reverting to the Economic Survey of India, even today, India’s number one source of exports, is not listed clearly or separately. In the Table of Exports in the Statistical Compendium, software is under “III. 7 Machinery, transport & metal manufactures, including iron and steel” under footnote “b”: “Also includes electronic goods and computer software.” The absurdity is simply mind-boggling, in addition to cruel and laughable. How, then, to explain the glowing and laudatory lines quoted at the beginning of this column? Simple. They come not from government figures but from NASSCOM.