Missing the IT boat, time & again

Written by M Sarita Varma | Updated: Apr 4 2011, 06:02am hrs
VS Achuthanandan is many thing to many people, but being tech-savvy is the last thing most would attribute to the 80-plus politician. However, when the former coir worker beamed a PowerPoint presentation from his laptop after a steep mountain trek to check on land ownership violations, it was a pleasant surprise, particularly for the state's IT sector.

The man who became Kerala's chief minister in 2006 also kept the IT portfolio with himself, raising hopes that this new facet would be an indication of his giving the sector a new drive.

But it has been a mixed bag. In e-literacy and e-governence, the state has performed well above the national average. However, it has lagged in private investment in IT, especially compared with neighbouring Karnataka and Andhra Pradesh. Many thought that Achuthanandan's new-found tech-literacy would outweigh his dogmas about MNCs and bring in fresh investment. Unfortunately, this took a long time to happen.

In fact, in the first three years of the VS Achuthanandan government, the chief minister's office was apathetic to the point of even hostility when a set of potential investors from abroad called on him. At a later stage, he seemed more receptive," an official of a consulate told FE.

When the CPI(M) hardliner chief minister shared tea and economic wisdom with free software guru Richard Stallman, it yielded mixed fortunes for Kerala IT. Riding the Stallman camaraderie, the Kerala government and open source technology provider Red Hat signed a memorandum of understanding to set up a global training centre to introduce low-cost PCs with free and open source software Linux and Red Hat certification programmes in schools. Kerala intended to be India's FOSS (free and open software systems) hub, vowed Achuthanandan.

State-run schools saved at least $2.3 million that would otherwise have been spent on proprietary software when it went for a FOSS platform for the laptops and PCs it bought for the highschoolers, said Anwar Sadath, director of Kerala's IT@School project.

However, logging out of Microsoft Windows also had portrayed the government as even more investor-unfriendly, particularly to big business. Worse, during the economic downturn, when IT space rentals fell in Bangalore and Chennai, in Kerala, where the state government is the main IT space landlord, the overheads actually went up. At one point, rentals for IT space in Kochi was 10% higher than that for the same kind of space in Bangalore, complained GTech, a grouping of technology firms in Kerala. GTech had to plead with the state to stop rent escalation. During this time, several companies in showpiece IT park Technopark, like UST Global and IBS, went ahead with their expansion outside the state.

Kerala had been following a hub-and-spoke model of IT development, with three major state-run IT parks Technopark in Thiruvananthapuram, Infopark in Kochi and Cyberpark in Kozhikode as the three hubs. But as an indicator of the state's ambivalence towards developing the sector, the SmartCity project in Kochi is a good example.

Conceived by the previous Congress-led government, it could not take off despite a memorandum of understanding being signed with Dubai Internet City in 2005 because of stiff opposition from the opposition, who argued that the deal was not in the best interests of the state, and the assembly elections that followed soon after.

Achuthanandan came to power after the elections, and given his stance, he could hardly support the deal as it stood. The terms were reviewed, and a new MoU was signed with Dubai Internet City in 2007. However, the deal ran aground over a few significant sticking points. Finally, in February 2011, the issues were sorted out and the $333-million project, which is estimated to create at least 90,000 IT jobs in one go, was cleared.

It might have been a coup d'etat for Achuthanandan, but it hasn't helped the state's image.

"If there has a been a phenomenal growth in IT turnover from Kerala, this has not been from any fresh investor. It only means that the existing companies in Technopark and Infopark had been pushing their business volumes, despite the government," said G Vijayaraghavan, founder and former CEO, Technopark.

For the first time, IT exports from Kerala is expected to cross $1billion in 2010-11, said Ajay Kumar, former principal secretary (IT), Kerala. This represents a 60% increase over the previous year. Kerala IT takes pride in that it had been growing by two to three times the national growth average of IT exports in the last couple of years. This is, of course, an effect of the low base in the previous years.

The SmartCity project will no doubt help boost the numbers. Still, it would have been a timely signal to foreign investors if the IT infrastructure project had been cleared three years ago, said Anoop P Ambika, secretary, Gtech.