The IT policy of Kerala Government, released in November 2001, set its sights rather low. There are no big plans to compete with East Asian countries, not even the neighbouring States. What the State can hope to achieve through the policy, at best, is to turn the State into a colony for developing countries for sourcing cheap software and services.
When an Internet year is just over 50 days, the policy hopes to establish Kerala as a leading IT destination in the country within the next five years. This is like planning for the next 35 years. Releasing the policy, the Industries Minister, Mr. P. K. Kunhalikutty, said that the Government was planning to lay the foundation for development of IT in the State, raising doubts whether those who framed the policy fully understood the demands of the technology that they wish to make use of for the State's development. Apparently, the Government has no plans to "build" now. If it has, it would have to redraw the plans by the time the foundation is ready, given the pace at which the technology is growing.
May be the Government is just being realistic, given the State's track record in industrial development in the past. So, the emphasis is largely on IT enabled services (ITES). The policy proposes to establish ITES as the definitive core competence of the State. It also eyes for new media products and e-services. But there is no special emphasis on multi media, though there is considerable scope for synergy with film and video productions in the State.
Kerala has been aping its neighbouring States on a number of counts relating to development of information technology in the past. Now, the policy also borrows from the policies of other States. As imitations could hardly ever beat the original, there is little chance of the State making any better gains than its neigbhours.
The cash starved State is proposing to offer considerable incentives to investors in software, hardware and ITES. State such as Andhra Pradesh already offers similar incentives. So, the incentives have been pegged up higher than the ones offered by others States. An early bird incentive of Rs. 50 lakhs is offered to investors who set up shop in six months and employ at least 250 persons for at least 12 months within three years. Only those who have their plans ready may be able to make the investment in time. Others could get a 40 per cent subsidy subject to a ceiling of Rs. 40 lakhs if they employed a specified number of people for 12 months. In this respect, it is notable that the Andhra Pradesh provides subsidy only if employment is provided for 24 months. A minimum salary of Rs. 5000 has also been specified.
Major IT players did not come to the State because the State could not offer the right climate and the right approach that gives them confidence about Government policies. It would not be surprising if the Government now attract fly by night operators as one can get a subsidy of Rs. 40 lakhs by investing Rs. 1 crore and employing specified number of people. Investment figure can easily be fudged, given the extent of corruption in the establishment, and people can be employed after taking deposits. Already, there are reports of some companies at the Technopark taking deposits and not paying their employees for months.
The LDF Government's IT policy had specified creation of a State Information Infrastructure. However, that did not come into being within the time frame specified. The present policy proposes to complete the task in another two years. As the State has no IT infrastructure or services worth the name, the money spent on incentives would actually go to those outside the State, at least initially. The State would thus be paying for its past failures.
The Human Resources Development initiatives in the policy also come late. But, better late than never. However, the emphasis seems to be on software. The State would soon require more hardware engineers and diploma holders, especially if it is to attempt any break through in the hardware sector.
The policy states that the Government wishes to encourage judicious use of open or free software that complements or supplements proprietary software. This indicates indecision. No specific areas have been mentioned. If the Government simply decides to have free software for word processing in all Government offices, the savings could just be tremendous. Stability would be a major gain if LINUX systems are adopted use at the back end for networking of Government offices. However, all this calls for a comprehensive approach. Training in open or free software at all levels, along with clear cut decision to use them in specified areas, are needed if the things are to work to the advantage of the State.
The policy has several proposals with regard to industrial relations and labour laws that have been long over due. The proposals for allowing women to work on three shifts and declaration of IT industry as public utility service were ones made by the State Advisory Council on IT three years ago. With the plans for introduction of self-certification regarding compliance with labour and other laws, the industry gets the chance to implement their projects quickly and without much harassment. However, the Government will have to be vigilant to ensure that the freedoms are not misused by the industry.
IT Industry in Kerala
IT Policy 1998-- A Critique