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DX094251.Pdf Open Research Online The Open University’s repository of research publications and other research outputs State policy, liberalisation and the development of the Indian software industry Thesis How to cite: Heeks, Richard Brendan (1991). State policy, liberalisation and the development of the Indian software industry. PhD thesis The Open University. For guidance on citations see FAQs. c 1991 The Author https://creativecommons.org/licenses/by-nc-nd/4.0/ Version: Version of Record Link(s) to article on publisher’s website: http://dx.doi.org/doi:10.21954/ou.ro.0000dfed Copyright and Moral Rights for the articles on this site are retained by the individual authors and/or other copyright owners. For more information on Open Research Online’s data policy on reuse of materials please consult the policies page. oro.open.ac.uk State Policy, Liberalisation and the Development of the Indian Software Industry Richard Brendan Heeks MA, MPhII Submitted for the degree of Doctor of Philosophy Technology Policy Group Faculty of Technology Open University January 1991 31 0076593 8 5 I llI IIll 1111111 II <1 L. L)N 7 State Policy, Liberalisation and the Development of the Indian Software Industry Richard Brendan Heeks MA, MPhII Submitted for the degree of Doctor of Philosophy Technology Policy Group Faculty of Technology Open University kr ii be oLsc orL IMAr January 1991 Abstract This thesis investigates the relationship between industrial development and industrial policy in a developing country. The chosen industry - software - is of recent origin and of growing importance in many developing countries, for which it can present one of the best entry points into the information technology production complex. Yet this industry and, particularly, the role of state policy in its development have been relatively neglected within the literature. The key policy issue of recent years has been policy liberalisation, and the thesis takes as its central theme the role that policy liberalisation plays in software industry development. A specific case study is made of the Indian software industry and Indian software policy because these have been long-standing, and because they combine high growth with liberalisation. The conclusion reached is that certain policy liberalisations may have a role to play in software industry development but that liberalisation cannot be seen as a 'panacea' for such development. The impacts of some liberalisations run counter to some long-term development objectives while state intervention is seen to have played a positive and necessary role in assisting software industry growth. At the same time, certain liberalisations are found to be either politically or financially unfeasible. Software policy makers face a major decision on whether to orient their industry towards the domestic or export markets. It is argued that the Indian industry has shown an export bias which should be reduced by greater orientation to the domestic market. Other developing countries may need to focus even more on domestic-oriented production rather than exports. Policy is not the only determinant of software industry development because technology, market entry barriers, input supply constraints, and producer-consumer relations also play a part. Nevertheless, policy has a very important role to play and should be applied in a non-dogmatic way that is responsive to the specific and changing circumstances of individual nations and industries. Acknowledgements The work was funded for three years by a joint SERC/ESRC studentship award. I would like to thank all those who have assisted me in the completion of this research. Dave Wield, Ben Crow and Tom Hewitt for their continuous positive support and their insightful contributions at crucial moments. Steph, who has offered her emotional support and interest, with the added bonus of an occasional insight. My parents and other family members for their emotional, financial and, even, spiritual support and encouragement. My fellow students and other colleagues, particularly within DPP and TPG, and especially Pam, for their understanding and reassurance. The many helpful academics, managers, programmers, state officials and others in India and the UK who gave up their time, and without whom no research would have been possible. The Open University, for providing me with the opportunity to undertake this research. Publications Material contained within this thesis has been included in the following publications. 'Soft option is hard work for India', The Independent, Computing section, p16, 31/7/89 New Technology and the International Division of Labour: a Case Study of the Indian Software Industry, DPP Working Paper no.17, Open University, Milton Keynes, 1989 'Fourth generation languages (4GLs) and the Indian software industry' in Information Technology in DeveloDing Countries, S.C. Bhatnagar & N. Bjorn-Andersen (eds), North- Holland, Amsterdam, 1990, 251-63 'Dangers in the fourth generation', Asian ComDuter Monthly, April 1990, p16 Software Policy in India: Desired and DesirableChanges, Centre for Technology Strategy, Open University, 1990 '4GLs: dream or nightmare?', Data q uest, May 1990, 114-16 'Government policy - bane or boon?', AsiarjCDmputer Monthly, July 1990, p19 'Technology policy making as a social and political process: liberalizing India's software policy', Technology Analysis & StrategicJanagernent, 2(3), 1990, 275-91 'The government's policy - bane or boon?', Data q uest, October 1990, p84 III Contents Abstract........................................... Acknowledgements . I I Publications...................................... III Contents........................................... iv Listof tables.................................... xi Listof figures.................................. xiii Chapter 1 : Introduction and Overview Introduction.............................................................................................1 1. Choice of industrial policy issue.....................................................................1 Liberalismand neo-Iiberalism...................................................2 1.1. The change from structuralism to neo-liberalism.........................3 2. Liberalisation - the key neo-liberal policy prescription.............................5 2.1. Liberalisation in the context of industrial policy...........................5 i. Inward-looking ... Outward-looking........................................6 ii. State ... Market........................................................................8 iii. Anti-foreign investment ... Pro-foreign investment...........9 iv. Public ownership ... Private ownership................................1 0 Industrialsector specificity.......................................................1 0 2.2 Evaluating liberalisation..................................................................1 0 Summary.....................................................................................1 2 3. Choice of industry...........................................................................................1 2 3.1. Software, hardware and software production..................................1 5 4. Choice of the Indian software industry...........................................................1 7 5. Overall question ..............................................................................................18 6.Datasources ....................................................................................................18 Interviewdetails .........................................................................21 Secondarysources .......................................................................2 2 7. Thesis argument..............................................................................................2 3 8. Thesis structure..............................................................................................2 5 Chapter 2 : Policy and LiberailsatlOn Introduction.............................................................................................27 1. Indian industrial policy..................................................................................27 1.1. Overall framework..........................................................................27 1.2. Chronology.......................................................................................28 Pre-1975 ...................................................................................29 1975-1984................................................................................29 Post-1984 ..................................................................................29 1.3. Technology policy.............................................................................31 1.4. Summary..........................................................................................3 2 2. Indian software policy.....................................................................................32 Pre-1980: building software exports.......................................32 1980-1984: punishing misusers..............................................33 1984-1986: iiberalisation........................................................ 34 1986: give and take.....................................................................35 1987-1990: lack of direction....................................................36 Policyand implementation..........................................................37 2 .1. Indian software policy and liberaliSatiOn........................................38
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