Story of Indias IT Revolution

India has had phenomenal growth as a country over the course of the past 75 years since achieving independence. Following India's IT revolution, the country's export of IT services increased from a meagre $3.5 million in 1980 to over $100 billion in 2016-17. India's IT growth is vividly described by government policies, technical developments, and industrial leaps. All of this contributes to what it is today: the introduction of computers and the internet to India, the implementation of computerized reservations by the Indian Railway, and the role that commercial and governmental policies had in the development of IT.

What Caused the Industry to Develop?

The first Prime Minister of India, Pandit Jawaharlal Nehru, is credited with founding and fostering important national institutions. The Tata Institute of Fundamental Research (TIFR) in Mumbai and the Indian Statistical Institute in Kolkata were institutions of national significance that marked India's entry into the computational world.

Whereas TIFR promoted nuclear programmes, the Indian Statistical Institute supported major government initiatives like the "five-year plan" with statistics and planning work. Indian Statistical Institute was the first organization to acquire a computer in 1956 and created one of the earliest mechanical calculators and analogue computers to solve mathematical equations. Later, the Electronics Committee was established in 1963 which planted the seeds for the development of the Indian electronics industry. The Committee, sometimes known as the "Bhabha Committee," provided a 10-year plan (1966–1975) for developing local manufacturing capabilities for computers and their component parts.

In 1970 government constituted the Department of Electronics (DoE) to regulate the electronics industry. The objective of the policies implemented since the early 1970s was to support a state-led electronics industry that includes both the federal and state governments. Also one of the mandates of the DoE was to build indigenous computers but unfortunately, it was met with limited commercial success.

The Sarabhai Committee agreed with the Bhabha Committee's emphasis on the growth of a domestic computer industry, which encouraged the building of computer manufacturing facilities in the public sector. The Department of Atomic Energy (DAE) established the Electronics Corporation of India Limited (ECIL) in 1967, and it was given the responsibility of commercializing the electronic systems created at the Atomic Research Center under the Department. By 1971, ECIL had evolved into a DoE-supported computer manufacturing company. The government's steadfast aim of fostering regional competence in the computer industry defined the 1970s.

The government's plan to make ECIL the leading company in the Indian sector, however, had, at best, mixed results. By roughly 1976, it had become clear that ECIL was unable to satisfy domestic computer demand with competitive costs and technology, claims Brunner. The disparity between the supply and demand of computers in the nation was widened.  These were strong reasons why the government should permit more private sector involvement in the computer industry. The government's position changed in 1978 with the introduction of the Minicomputer Policy, which allowed private sector businesses access to computers, which had previously been forbidden. Three private sector businesses were able to enter the industry more easily after the government simplified the requirements for acquiring industrial licenses.

Boosting the Electronics Industry's Growth in the 1980s

The focus switched in the 1980s to encourage the private sector to play a crucial role through a number of significant initiatives which foster innovation. The New Electronics Policy (NEP), which was unveiled in January 1984, had four major objectives of promoting technology transfer in the electronics sector;  importing computers for government agencies; creating "science cities" and "science parks" to entice Indian technicians who were working abroad to return home; and creating free-trade Export Processing Zones.

In order to convert the industry into a 'virtuous loop' of competitive prices/costs-higher demand-higher scale of production-higher efficiency-competitive prices/costs, a New Computer Policy (NCP) was introduced in 1984. It signalled a change from the prior approach that limited entrance for businesses affiliated with "monopoly houses" and those protected by the Foreign Exchange Regulation (FERA). Although domestic manufacturers first received import protection against competitors of similar products, imports of capital goods and technology were liberalized, and as a result, they were gradually exposed to worldwide competition.

The policies implemented by the NEP and NCP were a significant divergence from those of the 1970s; the main change was the latitude provided to the private sector to steer the industry. In order to increase domestic capabilities in the electronics industry, new institutions like the Centre for Development of Telematics (C-DoT), Technology Development Council, and Centre for Development of Advanced Computing (C-DAC) were established at the same time as existing public sector organizations were strengthened.

Evolution and reforms in the Electronics Industry

There were efforts being made to connect computers to a network. When NCSDCT (National Centre for Software Development and Computing Techniques), which was split off from TIFR, connected computers at TIFR and VJIT Mumbai via Bombay Telephone lines in 1977, it was the first to demonstrate the Wide Area Network. Later on, ERNET (Education and Research Network), modelled after ARPANET, was commissioned by DoE to connect the five IITs, IISc Bangalore, NCSDCT, and the Department of Electronics (DoE). In 1989, the internet arrived in India in this manner.

In 1981 the government liberalized unfriendly policies like the license raj in the electronics industry and allowed the import of computers against the obligation to export software. The government also established C-DoT to build digital exchanges for telecommunication in India. C-DoT’s innovative all-weather rugged digital switches pulled off the telecom revolution in India. In 1986 government further liberalized its policy and made it easier to import hardware and software. Eventually, this shift in policy left Indian hardware companies vulnerable.

While the government was contributing, the private sector had seen the potential of software and computing. India's entry into the international IT market was accelerated by external factors like the shortage of technical workers in the West, low labour costs in India, the transfer of knowledge and capability through links with US and European firms, firm-level changes and the emergence of opportunities like Y2K, few of them to mention.

India's fate has been intertwined with that of the rest of the globe ever since its independence. But due to the rapidly changing nature of the global environment, India too faced several difficulties. Then a significant development in India's IT market growth occurred. Tata founded TCS in 1968 in order to consolidate data processing for multiple Tata firms. The industry needed more providers during the 1970s, and new businesses like Infosys entered the market and eventually grabbed control of it. The HCL (Hindustan Computers Limited) 8C debuted in 1976 in India, three years before IBM's PC and at the same time as Apple in the US. HCL enjoyed success, but once import restrictions were loosened in 1984, a lot of businesses began manufacturing personal computers from foreign kits.

Beginning in the middle of the 1980s, the electronics industry saw significant change as a result of pro-active government initiatives. The New Electronics Policy (NEP) of 1984 witnessed the first of these, a relaxation of governmental oversight of the sector. The liberal economic policies that were implemented in the 1990s had their roots in this.
Many factors seem to converge in the 1990s to catapult India to the IT world map. In 1991 India’s economy was liberalized and then the license raj came to an end. The fact that software exports from India surged approximately 2.5 times in dollar terms in the years, 1998-1999 and 2000-2001 provides insight into the windfall enjoyed by Indian businesses.

The Development of the ITES Sector in India

The ITES sector in India, which is today among the top earners of foreign exchange evolved over the course of three major stages. The industry began to take off in the 1960s, and its export potential was identified as early as the first decade of the 1970s. The most significant policy the government implemented to increase this sector's export potential was to permit the duty-free import of computer systems for software export. The New Electronics Policy and the New Computer Policy, both of which were announced in 1984, are followed by the second phase. The formation of software technology parks with government support, which served as a springboard for the consolidation of the software sector, was the most significant development during this phase. The Y2K issue introduced the third phase. The Indian ITES industry's capacity to meet the demands of the year 2000 signalled the beginning of its emergence on the international scene.

The ITES Hub: The First Steps

Although Tata Consultancy Services (TCS) was the first company to join the market in 1968, the data conversion sector actually got its start when forerunners realised that due to India's low wage bill, certain services could be performed there for a considerably lower price. The industry began to have a clear shape by the middle of the 1970s. Tata-Burroughs was created as a result of TCS's partnership with American business Burroughs. Patni Computer Systems was the early pioneers' own business (PCS). The SEEPZ, which ran from 1973 to 1974, sparked the creation of a number of ITES businesses.

The industry needed more providers during the 1970s, and new businesses like Infosys entered the market and eventually grabbed control of it. However, as the advent of computers in India was met with fierce resistance, many of their positions were supplied by foreign organizations (mostly from the USA). The steady rise in software exports starting in the middle of the 1970s was a reflection of the ITES industry's health. Software exports rose to Rs. 44 million in 1981 from just Rs. 8.50 million in 1975. Software exports increased roughly by four times to Rs 420 million during the course of the following 5 years.

By the 1980s, it was evident that the government's own entities' plan for the expansion of the IT sector was doomed to failure. The government's invitation for international players to take the lead significantly altered the policy framework for the industry's expansion. Even before the government formally embraced the strategy of economic reforms in the early 1990s, the IT industry was the first to be opened to international investment. The government decided to open the sector rapidly during the period of economic reform. In 1997, India was one of the few developing nations to support the Information Technology Agreement, whose goal was to do away with tariffs on IT goods. Due to the government's efforts to increase the amount of economic integration between India and its partners, the IT and ITES sectors in India confronted significant obstacles. Ups and downs, still to go more, all this amplifies India’s progress into the global IT market.