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December - 2009 - issue > India Road Ahead

India Moving from Potential to Possibility

Pradip Dutta
Tuesday, December 1, 2009
Pradip Dutta
We have heard too many times that India is a land of huge potential. If the statement seemed routine in the past, there is a definite shift towards realization of that potential in the offing. I believe the 2003 Goldman Sachs BRIC report was the first tangible recognition of the fact that India is moving from potential to possibility. The underlying catalyst for this is obviously the changing economy and demography. One needs to understand the buying capacity that a considerable number of Indians enjoy today. A study by CRISIL showed that 26 million Indians have a per capita income of over $32000 (on PPP basis), which is almost equivalent to the entire population of Switzerland, Singapore and Australia, combined which also have similar levels of income. Add to it around 75 million Indians, who can be considered rightfully the upper middle class who enjoy a PPP income level of close to $9000. This is equivalent to three times the scenario in Malaysia.

While it is true that India also houses approximately 700 million poor people whose income is at the bottom of the pyramid, equal to what is seen at sub-Saharan Africa, it still leaves us with more than 250 million true middle class, with an annual income of about $3500. The reason I proffer all these statistics is to highlight the fact that there is a huge unmet consumptive base in this country which is looking for the latest in terms of technology, features, functions in its gadgets and widgets. In most all of the applications today, be it in automobiles, white goods sector, or pure play devices, the main driver is electronics. Therefore, we should expect a huge demand for electronics in the form of systems, semiconductors, chips, components and more.

The way to leverage the potential is, in my opinion, aligning all the vectors towards ensuring that we understand the opportunity and make sure we do not miss the bus, in terms of local design and manufacturing. I have always stated that for any country to prosper in high tech there has to be a strong synergy amongst the government, academia and industry. The education system has to create the next generation ready to address the market demands. The government must put priority on electronics design and manufacturing as a national agenda. Finally, Manufacturing has to be a key component of this exercise. If one looks at the history, it will be evident that in the US, government played a huge role in the development of the high tech sector through its national laboratories and defense investments. Closer to home, in countries like, Japan, Korea, Taiwan and China, government has taken major steps to promulgate electronics as a national program be it in telecommunications, SoC design, chip start-ups, incubation or local manufacturing. Even in a small country like Singapore, their government arm, EDB, plays a significant role in promoting the high tech industry.

India As a Hub of R&D
There are two distinct aspects to it. There is an indigenous segment such as HAL, BEL, ISRO, C-DOT, to name a few, which has dome tremendous work in developing technology for the country’s strategic national interests. On the other hand, for the past twenty five years, large scale investment in research and development have continued to happen in the multi-national corporations (MNCs) which have built up huge presence in the country. In Synopsys, we are fortunate to work with most of the world-class advanced chip design companies and we track what is happening around the globe and as well as in India. According to our in-house data, the complexity of the design work that is being carried out in India is just as superior as that in the famous Silicon Valley. This is a testament to the confidence global MNCs have in the quality and depth of the engineering talent that is available in India and the commensurate management skills that are required to channel that talent towards successful commercial programs. It makes us all feel proud of the fact that lately many of the global design houses claim that their latest products are architected and designed end-to-end by their teams in India.

What is needed to sustain this is continued focus in our engineering curriculum. We have to make sure that the thousands of engineers we graduate every year need to be trained on latest industry trends along with theoretical fundamentals. Industry cannot abdicate its responsibility and look towards universities as simply a factory to produce the next entry level recruit; some initiative has to be taken to make sure that the students get familiar with the latest trends and the industry can help by embracing a robust internship program. We can take further steps towards more R&D in the country by ensuring that our IPR regime remains world class. We ought to invest in hard physical infrastructure and finally we must promote the culture of building deep technical focus to create products beyond the oft-repeated service model.

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