Part 4 - Technology Race: India's Information Technology (IT) Status?

 

Part 4 - Technology Race:  India's Information Technology (IT) Status?

 

To gain a balanced perspective of where India stands in the Information Technology (IT) Race today, it is considered vital to recount key irrefutable facts to include: origins; Software Technology State, World Trade Agreement constraints after 1997, semiconductors - life blood of IT industry; Superfast Computers; Personal computers, Laptops and tablet market. 

 

The IT industry offers opportunities and also challenges. The global market size IT services and e-Commerce sector $3,938.75 billion in 2022. India's share is only over $227 billion. The global "Chips" industry is likely to grow nearly US$600 billion by the end of 2022. Similarly, the global "Chips" industry is likely to grow nearly US$600 billion by the end of 2022.  On paper, it is planned to grow at a compounded annual rate of 19 percent to $300 billion by 2026, which appears too ambitious. Also, the global computers market grew from $369.94 billion in 2021 to $416.79 billion in 2022. India accounts for a fraction of that at around $11 billion.  Need exists for launching bold initiatives and incentives.

 

Origins

 

 IT origins are traced to Aristotle (384 to 325 BC) whose thoughts of ideas inspired Leibniz's dream of a "universal language" that led to the  emergence of mathematical logic that was pioneered  by George Boole and Got lob Frege in the 19th century.

 

However, the IT revolution would not have been possible without the invention of "Zero".  The first recorded zero appeared in Mesopotamia around 3 B.C. India did not lag behind. Between 300 and 200 BC, Pingala was the first who used 'shunya' for zero as a Sanskrit word and developed the binary number system that is a place-value system.  Aryabhata (476-550 AD) invented the number “0” as a placeholder and in algorithms for finding square roots and cube roots. Later in AD 628, Brahmagupta defined zero for the first time and developed a symbol for it which is a dot underneath the numbers. The creation of the zero led to algebra and calculus that form the basis for computers and IT.

 

In 1930s, the evolution of computer science from mathematical logic culminated with two landmark papers: Claude Shannon’s “A Symbolic Analysis of Switching and Relay Circuits,” and Alan Turing’s “On Computable Numbers, With an Application to the Entscheidungs problem.”  The primary reference was a 90-year-old work of mathematical philosophy, George Boole’s "The Laws of Thought." Many programming languages are called Boolean.  Turing’s paper defined the template for computer design. Shannon's adviser, Vannevar Bush, built a prototype computer known as the Differential Analyzer that rapidly calculated differential equations.

 

At the dawn of 1947, the transistor was invented at Bell Labs, Transistors dramatically improved versions of Shannon’s electrical relays — the best known way to physically encode Boolean operations. Over the next 70 years, the semiconductor industry packed more and more transistors into smaller spaces. A 2016 iPhone has about 3.3 billion transistors, each one a “relay switch” like those pictured in Shannon’s diagrams.

 

IBM enjoyed absolute monopoly from 1950 to 1977 to sell and maintain computers. IBM sold first few computers to India: in 1956 a CDC 3600 to Indian Statistical Institute (ISI); in 1964, CDC computer to Tata Institute of Fundamental Research; in 1965 an IBM 1620 and in 1966 and IBM 7044 to IIT Kanpur. Thereafter, TATAS started the TCS with 3 computers purchased from the IBM.

 

In 1967, Electronics Corporation of India Limited (ECIL) was established at Hyderabad under the Department of Atomic Energy to create a strong indigenous base in electronics with focus on indigenous Nuclear energy, space and Defence sectors. ECIL developed and produced the first indigenous digital mainframes - TDC 312 and TDC 316 - solid state TV, control and instrumentation for nuclear power plants and first earth station antenna of India. But, failed later to keep pace with others in the field.

 

Software Growth

 

IBM decided to exit India in 1977 in protest of new FERA and FEMA regulations. Meanwhile, the Department of Electronics (DOE) incorporated 'Computer Management Corporation Private Limited' (CMC) in December 1975. CMC's role was to maintain the computers handed over by IBM. CMC was converted in August 1977 into a public limited company wholly owned by the GoI. The success story of the CMC which ventured into writing software and won the contract to build the Indian Railways reservation system, created a positive perception about computers and served as a model for banks and Air India automation projects. Thereafter, in 2001, the CMC was divested to the Tata Consultancy Services (TCS) and privatized.

 

 Hindustan Computers Limited or HCL Technologies was originally founded in August 1976 as a joint venture with the Uttar Pradesh government to produce computers. In 1981, even WIPRO or Western India Palm Refined Oil Limited ventured into the business of building minicomputers and microcomputers to fill the gap created by IBM’s exit. Due to import liberalization, all of them abandoned the hardware business unable to compete with Western products. 

 

HCL, WIPRO and Infosys ventured into 'software' following the growth opportunities and trends. WIPRO had built application software such as Wipro 456, a spreadsheet program similar to Lotus 1–2–3. The Infosys origins traced to Narendra Patni of "Computer Systems (1976) who hired N. R. Narayan Murthy and his core team. In 1980, Murthy with the core team left and formed the "Infosys". They started 'outsourcing' when imports were liberalized after 1984.

 

Meanwhile in 1977, NCSDCT (National Centre for Software Development and Computing Techniques), was carved out from Tata Institute of Fundamental Research (TIFR), which was first to demonstrate Wide Area Network when it linked computers at TIFR and VJIT Mumbai using Bombay Telephone lines. Later the Department of Electronics (DoE) commissioned ERNET (Education and Research Network) modeled on ARPANET to connect 5 IITs, IISc Bangalore, NCSDCT and DoE. Very soon ERNET partners could connect to the world on dial-up. That’s how the internet came to India in 1989.

 

 In a seminal decision in 1991 government decided to establish seven Software Technology Parks (STP) to provide infrastructure and statutory support to fledgling companies that played a key role in IT growth story. A pivotal moment came in 1993 when satellite link became operational at Bangalore STP. Software companies located in the park could now do video conferencing with their overseas clients and ship software's over the satellite connection. Two years later VSNL launched Internet Services and in 1998 Government allowed companies to set up private ISPs leading to the explosion of internet users.

 

 Justifiably, the credit for the success story of "Software Development" goes to the entrepreneurial spirit of its founding fathers; but also knee-jerk government policy initiatives. The Book "Outsourcer" by Dinesh C. Sharma provides a detailed account of the growth story of how IT services grew from $3.5 million in 1980 to over $227 billion as per the NASSCOM report - Strategic Review 2022. The Strategic Report provides an insight into the achievements to include: 59% share in global sourcing market constituting share of digital revenue at 30-32% of total revenue; 5 million total workforce with 4,45,000 net addition with ability to adapt to Hybrid work models and scale up the industry’s digital capacity/capability building programs; combination of Digital and innovation as winning formula; Platformisation and XaaS accelerating tech adoption; tech start-ups leapfrogging into scale-up mode; doubled down on operational excellence to manage margin pressures; and the e-Commerce sector saw the deeper penetration of the O+O model (Offline +Online).

 

Furthermore, the Strategic Report forecasts user industries (enterprise sector) contribution to scale up to $350-400 Billion to India’s dream of becoming a $1 Trillion digital economy. With an aim to guide future tech investments, NASSCOM has included an assessment of 25 technologies that firms should prioritize over the next 3-10 years. These are expected to invite large investments and have a strong impact on the core industry, the value chain, and the overall Indian economy.

 

On the basis of survey of end users and the CEOs, NASSCOM Report also includes road map ahead of optimistic estimates for FY2023: R&D investments are expected to grow between 10% and 20%; maintain or grow their hiring in line with 2022; identified growth opportunities in infrastructure and managed services, consulting in platform BPM, data management & RPA, ER&D deeper penetration of engineering cloud, and greater off take of productivity software, cyber security solutions. Finally, e-Commerce industry is set to get further disrupted by the fast-growing interest around metaverse.

 

India’s IT services industry is today again at the crossroads. Many low cost destinations have emerged in the Philippines and SouthEast Asia. Anti-outsourcing wave has swept through Britain and the US. The Indian IT industry will be facing tougher visa norms and hiring locally. There is also a shift in global demand in IT services. In an era of cloud computing there won’t be traditional development and maintenance jobs. Many low end jobs will get automated and the IT industry will have to move up the value chain to continue delivering value to their customers.

 

Hardware - Semiconductor Chips

 

Next, the state of the "Hardware" industry. In 1997, India became a signatory to the World Trade Organization’s IT Agreement accepting the conditions of  "no duty on software, semiconductors, semiconductor manufacturing and testing equipment, computers, telecom equipment, scientific instruments, as well as most of the parts and accessories of these products.  Consequently, India failed to consolidate and advance the "Hardware" industry, particularly the Semiconductor Chips making industry that was booming and the lifeblood of production in the ongoing information age.

 

There are four main categories of semiconductors - memory chips, microprocessors, standard chips, and complex systems-on-a-chip (SoCs). Semiconductor chips are dual-use goods - products that have both military and civilian applications - such as air guidance systems for both civilian and military aircraft. In a futuristic scenario, "Chips" will be even more important across all industries, driven by increasing semiconductor content in everything including defense systems. Only three firms in the world are able to make advanced processors: Intel, Taiwan Semiconductor Manufacturing Company (Tsmc), and Samsung of South Korea. They are the driving force of economic prosperity of developed nations.

 

Designing chips is now easier than ever; but not the astronomical costs of establishing units. A report in 2011 from McKinsey put the typical cost of an advanced fab at $3bn-4bn. More recently, Tsmc’s 3nm factory, completed in 2020, in southern Taiwan, cost $19.5bn. The firm is already pondering another for 2nm chips.  Now, factories require spending vast sums with plasma-etching kits, vapor-deposition devices and 180-tonne lithography machines the size of a double-decker bus. In absolute terms, the cost of high-tech “fabs” has grown relentlessly.  Samsung, a South Korean conglomerate, wants to invest more than $100bn over ten years in its chip business. "Tsmc", which turns blueprints into silicon on behalf of firms like amd and Nvidia, has increased capital spending to as much as $28bn.

 

China has set an ambitious target of producing 70 per cent of its chip needs in-house by 2025 — assuming a $220 billion consumption, that is around $150 billion. The Chinese plan is to become self-sufficient in critical technologies by 2025 due to American sanctions depriving it foreign imports.  India's semiconductor market, pegged at $119 billion in 2021, will grow at a compounded annual rate of 19 percent to $300 billion by 2026. New Delhi's strategy is twofold — lure in foreign companies and build on areas where India has an advantage, such as chip design.           

 

India woefully lags in the establishment of semiconductor wafer fabrication (FAB) units – due to a weak ecosystem and shortage of resources as compared to more competitive bases like China and Vietnam. For years technology companies bought chips off the shelf. Under the India Semiconductor Mission (ISM),  four schemes have been introduced with fiscal support to eligible applicants to include: for setting up of various categories of  Semiconductor Fabs; setting up Display Fabs; setting up of Compound Semiconductors/Silicon Photonics/Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities; and design Linked Incentive (DLI) Scheme. The  ISM will coordinate with the applicant companies and work closely with the state governments to establish high-tech clusters with 300 - 500 acres of developed land, 100 KVA Power, 50 MLD Water, availability of natural gases and common facility centres for testing and certification.  The government has already identified institutes where 85,000 engineers will be trained for semiconductor manufacturing. The Government has also handed over SCL Mohali to  MeitY from the Department of Space and opened it up as a commercial  Brownfield Fab for wider participation by Indian semiconductor design companies..

 

The first round of applications was invited till February 15 2022 for the establishment of Semiconductor Fabs, Display Fabs, Packaging and Designs. Three companies - Vedanta in JV with Foxconn, Singapore headquartered IGSS Ventures Pte and ISMC - have submitted proposals for setting up  28nm to 65nm Semiconductor Fabs with capacity of approx. 120,000 wafers per month and the projected investment of $13.6 billion wherein fiscal support from the Government sought for nearly $5.6 billion. And, for Display Fabs from  two companies  - Vedanta and Elest -  have submitted applications for setting up Gen 8.6 TFT LCD Display Fab as well as 6th Generation Display FAB for the manufacture of State-of-art AMOLED display panels that are used in the advanced smartphones   with the projected investment of $6.7 billion seeking fiscal support from the Government for nearly $2.7 billion. For Semiconductor Packaging, four companies - SPEL Semiconductor Ltd., HCL, Syrma Technology and Valenkani Electronics - have registered. Under  Compound Semiconductors Scheme,  Ruttonsha International Rectifier Ltd. has registered. Under the design linked incentive scheme, Terminus  circuits, Trispace Technologies and Curie Microelectronics have submitted applications.

 

Hardware - Supercomputers, PCs, Laptops and Smartphones

 

Next, where does India stand in the "Top 500 Superfast Computers" ranking? The No. 1 spot is now held by the "Frontier system" in the US surpassing the 1 exaflop barrier - the first exascale most powerful supercomputer to ever exist. By comparison with characteristics like R/Peak and R/Max T/Flops, Indian superfast computers in Top 500 List further pale into insignificance.  As of November 2022, India stands jointly with three other nations at 13th place with four Superfast computers, which in total numbers of superfast computers is woefully insignificant compare to  China  with 173, US with  149, Japan with 32, Germany with 26, France with 19 and Canada and UK  with each.

 

In 1970, government created Department of Electronics (DoE) to regulate electronics industry. One of the mandates of DoE was to build indigenous computers. DoE also introduced license raj in the electronics industry resulting in 'stunted' growth of hardware. In 1971, the government did not approve Delhi Cotton Mill (DCM) proposal to collaborate with Japanese giant Sony to build calculators.  However, DCM built first indigenous calculator in 1972. In 1975 DCM launched India’s first microprocessor. DCMs 'Core Team' left and founded HCL or Hindustan Computers Limited as a joint venture with Uttar Pradesh Electronics Corporation Limited.

 

It was only in 1981 government liberalized unfriendly policies and allowed import of computers against obligation to export software. C-DoT’s mandate was to build digital exchanges for telecommunication in India. C-DoT’s innovative all weather rugged digital switches pulled off telecom revolution in India. In 1986 government further liberalized its policy and made it easier to import hardware and software. They had no choice but to partner with the global giants.

 

Subsequently only, multiple projects were commissioned from different organizations. The project “Flosolver MK1“ was initiated only in December 1986.  The Centre for Development of Advanced Computing (C-DAC) was created in November 1987 and was allotted a three-year budget of Rs 375 million to create 1000Mflops (1Gflops) supercomputers. Other organizations like  NAL, BARC, and ANURAG were created. In 1988, the US Government refused to sell India a Cray supercomputer due to concerns about India using it to develop nuclear weapons. In response, India started development of its own supercomputer. The “PARAM” (short form for Parallel Machine) series of supercomputers were designed and assembled at Pune in three missions.

 

In 2015, the launch of the National Supercomputing Mission (NSM) boosted the pace of Indian supercomputers. NSM announced a seven-year programme worth Rs 4,500 crore to install 73 indigenous supercomputers by 2022. However, as of May 2022, there are 15 superfast computers only in India. Out of them, four are in the Top 500 Global Ranking list to include: PARAM Ananta  (Global Ranking 102) developed under the NSCM by C-DAC and IIT Gandhinagar, that has only a peak performance of 3.3 Petaflops; 111 - PARAM Siddhi-AI at C-DAC (R/Peak - 5,267.1); 132 - Pratyush (Cray XC40) at Indian Institute of Tropical Meteorology, Pune (R/Peak - 5,267.1) and at 249 place - Mihir (Cray XC40) at the National Centre for Medium Range Weather Forecasting, Noida, (R/Peak -  2,808.7). Add to the four, there are other supercomputers today in India to include: PARAM Shivay at IIT, BHU; PARAM Shakti at IIT-Kharagpur; PARAM Brahma at IISER Pune; PARAM Yukti at JNCASR, Bengaluru; PARAM Sanganak at IIT Kanpur; PARAM-ISHAN at IIT Guwahati; and PARAM Pravega at the IISc, Bengaluru etc.

 

Next, the development of personal computers industry began in 1977, with the introduction of three preassembled mass-produced personal computers in the advanced countries: the Apple Computer, Apple II, the Tandy Radio Shack TRS-80, and the Commodore Business Machines Personal Electronic Transactor (PET). The global computers market grew from $369.94 billion in 2021 to $416.79 billion in 2022 at a compound annual growth rate (CAGR) of 12.7%. India accounts for a fraction of that at around $11 billion. Due to WTO Agreement in 1997, the PC and Laptop manufacturing, electronics manufacturing, smartphones and I-phones industry has been virtually destroyed.

 

In 2020 only, under the Production Linked Incentive (PLI) Scheme was launched. The outlay for mobile phone PLI is Rs 40,951 crore over 5 years, with incentives ranging between 4-6% annually. The government’s strategy, combined with a huge domestic market, helped India to become the world’s 2nd-biggest mobile phone producer after China.

 

 In 2021, the PLI scheme worth Rs 7,350 crore was launched to boost local manufacturing and exports of IT products for laptops, tablets, all-in-one personal computers and servers with a view to cut imports, especially from China. In the first year (FY22) hardware production is Rs 2,000 crore only.  And, the results have been lackluster. Only four of the 14 eligible players under the scheme in the first year of operations have succeeded in meeting their production targets and will receive incentives. Only 18% of all PCs sold in India are now manufactured locally. Also, India now accounts for 5% of global PC shipments with- exports jumping to 5.8 million units. Due to demand in the IT sector, imports of laptops and tablets have gone up sharply by over 53% from $5.2 billion in FY21 to $8.0 billion in FY22.  The Manufacturers Association of Information Technology (MAIT), the apex IT hardware association, has requested the government to double the duration of the PLI scheme to eight years and to increase the incentive from Rs 7,350 crore three-fold to around Rs 21,000-22,000 crore.

 

Overview

 

To sum-up, political leader's phenomenal lack of foresight ab initio was real after 1947. Naturally, IT industry components failed to exploit opportunities in the early stages of the "3rd Industrial Revolution, or Digital Revolution" after World War II that spread automation and digitization through the use of computers and the invention of the Internet. License Raj until early 1980s and the WTO Agreement in 1997 stunted the growth of "Hardware" industry. Yet, the private entrepreneurial spirit pursued with rigor developed the "Software" industry to present "Superpower" status.  

 

India lagged woefully behind until 1985 in semiconductor chip making and computer hardware - nearly 40 years behind in realizing and launching projects to develop computers and the budget allocation was meager.  Now, the pace of development of IT, particularly, has improved after 2014; but the allocation of financial resources, liberalization and incentives remain meager. If India wants to catch up with the top 4-5 countries, the government must demonstrate political will and promote the industry with credible strategies in all fields of IT.  Also, the structures and roles of each organization be reviewed to eliminate non-essentials departments involved in activities other than executing primary roles. Also, examine the feasibility of mergers to ensure cost-effective and optimum management.   

 

Whereas, the Tsmc’s 3nm factory completed in 2020, in southern Taiwan, cost $19.5bn. And, the firm is already pondering another for 2nm chips.  India's present plan is to manufacture 28nm to 65nm Semiconductor Fabs. Surely, the Indian government and private industry needs to make a quantum jump to catch up with the Tsmc, Samsung and Intel.

 

Currently, the 4th Industrial Revolution is sweeping, known as the Information age  or Imagination Age or as the Computer Age or Digital or Silicon Age and New Media Age, beginning in the mid- 20th Century.  And, there is paradigm shift from traditional industry to an economy primarily based upon IT and, the trend towards automation and data exchange in manufacturing technologies and processes which include cyber-physical systems (CPS), IoT, industrial internet of things, cloud computing, cognitive computing, and artificial intelligence that offers tremendous opportunities to exploit.  

Article by GB Reddy Sir

 

(Part 5 - Nuclear Energy Technology)