The key reason that India can't compete with the Chinese and others in hardware is touched upon by the following quote from the article: "Companies at the park do not have to pay duties on imported machinery or raw material."
In order to make anything these days you need to import tons of raw materials, the import duties in India are so high that India just can't compete. The only sphere where India can compete is in the software and services industry, where India's educated English speaking population gives it a big advantage. When the Chinese learn to speak English, which has become a national obsession then India will be in big trouble.
In most advanced countries most of the taxes come from income tax. In India taxes come mainly from import duties, and corporate taxes. This is not true for any advanced country. For example, the Wall Street Journal did a survey of U.S. corporations, and found that 60% paid *NO* taxes between 1996-2001. Naturally this puts Indian companies at a disadvantage when it comes to capital intensive tasks like manufacturing.
As compared to china we can have low labour cost an dinput cost but the low cost labour need to be educated.Then Indian will improve a lot in IT hardware.
A very good and informative article and I am sure will motivate people to establis their own business leaving the rut of a 9 to 5 job. One thing that the author missed is to have studied the enviromental consequences of such industries and how to minimize released waste and recycle it to have miniscule impact on the environment!
Taiwan does very little design. Most of it is manufacturing. TSMC is the world's largest manufacturer of chips. However it does not design any, merely fabricates. 80% of the design is done in USA, Japan, etc. Like India, taiwan does the low cost high volume mediocre skill jobs. Let's not kid ourselves (I've worked for India's biggest software/IT firm... now doing a PhD in microprocessor design) The work that we do is largely low end. Do we do IT consulting - system level design, or high level and low level design? No (Our names might have consultancy in it, but all we do is code somone else's design.Any idiot can code. the skill lies in coming up with an efficient system. All foreign cos. pref to get this design done by IBM, accenture etc and send all the coding to India. TSMC at one time operated at 60% profit. they had a chance to move up the value chain, do design and fab... they could have been amazing. Instead, they preferred the status-quo. their profits are really low now... Unless the indian IT majors make serious attempts at moving up the value chain, they will end up in the same hole as TSMC finds itself in, with increasing overall costs.
RE:Taiwan is what india is in software
by bali on Jun 16, 2005 07:26 PM Permalink
I too work in a U.S. based semiconductor design company. I agree that you have a valid point. But I have to say, most of the people who work for IBM, Microsoft, Broadcom et. al. in the US are Indian, Chinese, and European; there are very few actual Americans in the industry. America has positioned herself so that the best and the brightest from all over the world come here. When this changes, and I think it will as the economic center of gravity shifts to Asia, then America will no longer be the dominant force.
Also, let's not kid ourselves, the so called high level design you describe is not really very difficult; nobody is going to win a nobel prize for doing this work, people in countries like India just lack the experience and confidence to do it.
