Staff Correspondent

Russia, China offer stiff competition to India in IT services

`India, China more attractive FDI destinations than U.S.'An increase in H1B visas by the U.S. Govt. suggested

CHENNAI: If India needs to be a global player in software, it has to open up the government procurement market for hardware, says Robert Atkinson, President, Information Technology and Innovation Foundation (ITIF), Washington DC.

ITIF is a non-profit and non-partisan public policy think-tank, focussing on innovation, productivity and digital economy issues.

"Indian government procurement market is not open to us. If you want to be a global player, it has to work both ways," he said. "You want to do software services to the U.S. companies, but do not want to buy Dell or HP product. Around 80 per cent of the software in India and China are pirated," he pointed out.

The weighted average tariff in India was 28 per cent compared to just six per cent in China. India had reduced tariffs significantly, he said at a session on " The New Economy: Implications for the Developing World, including India," organised by the Confederation of Indian Industry (CII) on Tuesday.

Quoting an AT Kearney's Foreign Direct Investment Confidence Index, he said China and India were more attractive for FDI than the U.S., which was in the third place.

The manufacturing productivity in India and ASEAN countries grew slower than that in the U.S. McKinsey Global Institute found that productivity in less protected software and telecommunications sectors in India was about 40 to 50 per cent of U.S. levels. In more sheltered retail and retailing banking, it was 6 and 12 per cent, respectively, of the U.S. levels, he added.

Mr. Atkinson said India lagged behind in ICT use. Asian nations, in general, lagged behind in ICT use, he pointed out.

Mr. Atkinson advocated an increase in H1B visas by the U.S. Government. A number of companies violated the U.S. laws by paying wages below the market rates. Increasing H1B Visa was an enforcement issue and solved the violation problem, he added.

Mr. Atkinson said Russia and China were posing stiff competition for India in the IT sector. Russia's software exports were up from $128 million in 2001 to $1.5 billion this year. China was the second largest investor in R & D. He said India should reduce its trade barriers to be a global player. On the one hand, India wanted to be a location of choice for off-shored software services, but, on the other, was erecting high barriers to foreign firms accessing the local market.