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PM for India-China alliance in IT industry

SHANGHAI June 26. The Prime Minister, Atal Behari Vajpayee, has said it was "self-evident" from China's "core competence" in hardware and India's in software that there existed a natural ground for an "effective alliance" in the information technology sector.

Addressing a large gathering of industry and IT professionals here today, Mr. Vajpayee went to the extent of suggesting that the 2008 Olympic Games in Beijing could provide a "good opportunity" for Indian and Chinese companies to work together.

In his last public function during his six-day China trip, the Prime Minister said it was appropriate that the IT event was being held in Shanghai — a showcase of China's economic transformation and a hub for its technological development.

He also referred to the establishment of a Joint Study Group to recommend concrete measures to further trade between the two countries; an agreement officials say is akin to the closer economic relationship that India has been trying to build with Singapore. "Our experience has been that in mega events like these, a substantial proportion of the contracts awarded in the IT sector are actually sub-contracted to Indian firms by contractors from the developed countries," the Prime Minister said, making a strong pitch for direct industry linkages.

"Indian and Chinese firms could instead join up to provide state-of-the-art solutions at cost-effective prices, thereby also cutting out the middlemen. We could even think of a joint institutional mechanism between the two Governments which could see whether modalities could be worked out for this." If economic cooperation between India and China was to break out of the present "traditional" mould then knowledge-based technologies need to occupy a far more prominent position in the economic relations.

"I believe the discussions today would illustrate the tremendous scope. The two Governments can only give policy and infrastructure support to this endeavour. Indian and Chinese business and industry have to take up this challenge."

India's IT industry had been a major success story with market capitalisation climbing from $ 4 billion to $ 50 billion today while India's exports were some $ 10 billion.

"Apart from traditional on-site software development, Indian companies have also ventured into IT-enabled services like call centres, medical transcription, data digitisation, legal data bases and animation.

"More than 500 portals are being launched in India every month. Of the 70 global software companies with the highest certification for quality control, 48 are Indian.

One of the four major IT firms has recently crossed $1 billion in revenues, and at least two other major firms are close to this impressive figure."

India was aware of China's impressive capabilities in information and communications technologies. "China is one of the world's leaders in computer hardware. The Chinese IT industry achieved a total volume of over $ 25 billion in hardware alone. What is perhaps less well known is that China's software industry has also been surging ahead." There was another potential strategic gain from an India-China IT partnership. Technological advantage could only be sustained with intensive research and continuous innovation.

"If countries like India and China were to concentrate on specific areas of their technological advantage, they could benefit far more than by competing across the spectrum. In combination, rather than competition, Indian and Chinese IT industries can be a potent force. This is a principle which has far wider application in South-South cooperation."

Mr. Vajpayee said that India had a national e-governance programme seeking to link grassroots public services with those at the macro level.

Here again, India and China could share experiences in optimising the e-governance systems. The Prime Minister, who leaves for home on Friday afternoon, is scheduled to address a press conference in Shanghai before his departure.

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