A non-profit public policy think tank asked India to open up government Information Technology (IT) procurement policies by removing restrictions on foreign manufactured equipment and instituting stronger intellectual property rights (IPR) protection mechanisms. Technology and Innovation Foundation (ITIF) President Robert Atkinson said that such open policies are required so technology and trade movement “work both ways.”
Atkinson says that India’s crippling 28% weighted average tariff compared to China’s 6% is stopping a faster adoption of technology. Quoting a AT Kearney’s Foreign Direct Investment Confidence Index, he says that China and India ranked higher as investment destinations than the US and these numbers will go higher with changed policies. If India does not, Atkinson warns that productivity levels will be at current lower levels of 40%-50% of US levels in telecommunications and 6%-12% in retail and retail banking. He cites a US McKinsey Global Institute to support his assertions.
Speaking at the Confederation of Indian Industry (CII), says that the lack of adoption of technology stemming from suffocating government policies is also keeping the nation behind its Asian peers. He warned that Russia and China are emerging as major IT competitors to India with Russian software exports growing from USD 128 million in 2001 to USD 1.5 billion this year. Similarly, China is currently the second largest investor in research and development. Atkinson warned that if India continued with its high barrier regime, other nations will benefit with investment and product efficiencies of global companies.
While a lot of what Atkinson says makes sense, it is disingenuous to support unreasonable prices for operating systems software and standard productivity software since Indian customers do not have the access to customer or product support. Instead of arguing for across the board lower tariff, the right policy is to reward companies with orders based on their investment, job creation, and price rationalization in India.