By Tarun Kumar G. Singhal, Raman Jokhakar Chartered Accountants
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India’s information technology revolution happened on its own and we can’t expect it to go on forever. Infosys last week unveiled lacklustre financial results for the March quarter, in line with the trend seen among top-tier IT companies. While it may be too early to reach a definitive conclusion on the scale of challenges confronting the IT sector and its capacity to overcome them, the financial results should serve as a wake-up call to India’s economic policy makers. It’s time to diversify our basket of services exports instead of just firing on one or two cylinders. India should look to match its greatest wealth, its human potential, with the latent global demand that exists across a range of services beyond IT.
A vigorous emphasis on services will dovetail nicely with the thrust on manufacturing through ‘Make in India’. In the wake of technological changes, boundaries between manufacturing and services have begun to blur. Consequently, ‘Make in India’ can be complemented by ‘Do in India’. Two building blocks are needed to harness the potential of services exports. The protectionist thrust of trade policy must be discarded. Unless India opens up its services sector, opportunities to be part of a global network can never be exploited in full measure. If there is a lesson to be learnt from the success of IT, it is that openness leads to job creation.
The lowering of barriers must also encompass the education sector, which needs to welcome rather than run scared from participation of foreign universities. Raising India’s abysmal standard of education is critical to tapping opportunities in services. Under present HRD minister Smriti Irani, counterproductive micromanagement of institutions seems to be the preferred approach to education policy. This must end and a new era of competition, diversity, growth facilitation and quality enhancement begin.
Prime Minister Narendra Modi is a votary of expanding services. His government has shown willingness to act on this conviction. Gujarat International Finance Tec-City (GIFT) was launched this month with the aim of becoming an international financial centre. In a similar manner, India can piggyback on homegrown talent to be a part of the global network in areas such as entertainment, tourism, legal and accounting services. It is time to junk existing shibboleths and show some ambition.
(Source: Editorial in The Times Of India dated 28-04-2015.)
