Atal moots IT alliance

Atal said Indian and Chinese IT industries can be a potent force "in combination", rather than in competition, reports Vir Sanghvi.

India wants to set up a joint institutional mechanism with China to compete jointly for international software contracts. Addressing the Shanghai Council for the Promotion of International Trade on Thursday, Prime Minister Atal Bihari Vajpayee suggested that the Indian and Chinese governments should set up a joint body that would ensure that the two Asian giants did not compete unnecessarily against each other.

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"In combination, rather than in competition, Indian and Chinese IT industries can be a potent force," Vajpayee said, adding, "This is a principle which has far wider application in South-South co-operation."

With the political part of Vajpayee's trip over, the focus has shifted to trade and industry. While the Chinese are, generally, leery about India's economic progress in comparison to their own, there is one area where they have a grudging respect for India's achievements: IT.

Vajpayee sought to capitalise on this reluctant admiration for at least one Indian achievement by showcasing India's IT success story. While China's successes have come in the field of hardware — an annual turnover of 25 billion dollars last year — there is no Chinese Infosys or Wipro and nor are there software professionals regarded with the same respect internationally as the whiz-kids of Bangalore's Silicon Valley.

Nevertheless, the Indian software industry recognises that China is the only Asian country with the potential to become a possible rival. Hence Vajpayee's suggestion that the two countries should work together.

"The strong international brand recognition of Indian IT firms is an asset that can enrich an India-China partnership," said Vajpayee, drawing attention to the undeniable fact that few people in the West have ever heard of Chinese software companies.

The general spirit of Vajpayee's successful political visit to Beijing has been to set aside contentious issues and to look for possible collaborations. In keeping with that spirit, Vajpayee suggested that the 2008 Olympic Games in Beijing would provide an opportunity for an India-China's IT partnership.

As he said: "Experience has shown that in mega-events like these, a substantial portion of the IT contracts are actually sub-contracted to Indian firms by contractors from developed countries. India and China could instead join up to provide state-of-the-art solutions at cost-effective prices, thereby also cutting out the middlemen."

The Chinese applauded Vajpayee’s words. It remains to be seen whether they will act on them.