1. State of R & D in ICT Sector in India By Dr T.H. CHOWDARY* * Director: Center for Telecom Management and Studies Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191/ 2784-6137(O) 2784-3121® F: +91 (40) 6667-1111, 2789-6103 hanuman.chowdary@tcs.com thc@satyam.com Talk @ Birla Science Center- Sixth Indo-Italian Workshop : 31 st August 2007

2. THC_CTMSS357_Aug 072 R & D Establishments Telecom Research center C-DOT C-DAC CEERI DRDO [+Allied Unit]

3. THC_CTMSS357_Aug 073 Production/Manufacture Supported I T I B E L E C I L Scores of Private enterprises Members of TEMA

4. THC_CTMSS357_Aug 074 R & D – Hardly any in India ITI – (Established:1948) R&D spend in 2006- Rs.38.73 Cr [2.21% of sales, down from 2.66% in 2005 Ranbaxy 17.88% SuvenLife Sciences 26.59% Astra Microwave 13.26% Himachal Futuristic 0.8% Ramco 26.47%&Visual Soft 4.36% US IT Companies spend 15% to 30% of Sales on R &D Telcos (Mfg) in Mfg countries spend– 10% to 15% of Sales on R&D

5. THC_CTMSS357_Aug 075 Growing National Champions China’s HUAWI; ZTE Korea’s LG, Samsung… Investing in R&D; Create IPR Have we a Bell Labs & British Telecom research Mfg. Cos ( Lucent, NEC, Fujitsu, Nokia, LG, ZTE, INTEL, Motorola) spend ( 8 to 15)% of sales on R&D ZTE & HUAWI begotten & nourished by PLA

6. THC_CTMSS357_Aug 076 Scientists Per One Million of Population Japan5,095 USA4,099 Australia3,393 UK2,666 China545 India157

7. THC_CTMSS357_Aug 077 Foreign Companies Engaging Indian intellect (1/2) Motorola – 1700 employees 40% of software in its mobiles developed in India The Internet browser and multi-media messaging system conceived and developed for 3G and GSM by Indian engineers working for foreign companies. The software going into US cars is being developed here in India.

8. THC_CTMSS357_Aug 078 Foreign Companies Engaging Indian intellect (2/2) GE – Largest R&D center outside USA is in India in Bangalore with 2300 researchers, double that in Shanghai; A 2 nd one in Hyderabad with 2000 researchers GE put in $ 80 mln in the Bangalore R&D facility GE’s Bangalore R&D field for 260 patents in the USA (37 already approved) Boeing USA is outsourcing Aircraft design to Russia ( $ 120/ Hr) Russians are outsourcing parts of the design to HAL (BG) at $ 30/Hr Gorbachev went to USA to recommend Moscow as Bangalore’s rival! An Indian retained does the work of 2 or 3 Europeans; does not take 6 weeks of holidays & costs one-fourth

9. THC_CTMSS357_Aug 079 New IT Townships Co.RelianceDLFTatasUnitechBaba kalyani Acres.100,00050,00030,000 27,000 MahindraEMARANSAL’sInfosys 10,000 2,145

10. THC_CTMSS357_Aug 0710 Telecom Equipment & Services Market for 2003-2004 Figures in (Rs) crores S. No ProductTotal Market Local Manufacture & Services Imports 1Switching-Wireline including CDMA3,5002,600900 2Switching-Wireless-GSM9,6505009,150 3Terminals- Fixed & Voice solution850600250 4Terminals-Wireless GSM & CDMA11,375600200 5Transmission Equipment – including line, 2-way radio, Multi-Channel Radio Relay System, DWDM & DLC 2,500345 6Cables – PIJF, OFC and Structured Cabling 70050-

11. THC_CTMSS357_Aug 0711 Telecom Equipment & Services Market for 2003-2004 (contd..) S. No ProductTotal Market Local Manufacture & Services Imports 7EPBT, Feature Phones, CLI, PABX Phones, Customer Premises Equipment and voice solutions 850250244 8VSAT Equipment23434200 9Signalling Equipment ( Road, Railways, Defeance etc.) 55505 10UPS, Power Plant, Inverter etc.250 - 11Test & Measurement Equipment29450244 12Miscellaneous Equipment, Data Communication Equipment – Call Monitoring, Antenna, Answering machines etc. 440 -

12. THC_CTMSS357_Aug 0712 Telecom Equipment & Services Market for 2003-2004 (contd..) S. No ProductTotal Market Local Manufacture & Services Imports 13Billing equipment including OSS & BSS 17550125 14Turnkey Services2,272 - 15Production by BSNL Factories155 - 16Export of Telecom Hardware an d Services 700700**- Total34,00014,00020,000 Source: DIT figures, estimates of V&D checked with DOT Annual Report and reference from selected TEMA Members The figures include grey market Expenditure on infrastructure & terminal equipment assumed to be made during the same financial year ** 250 cr. Hardware, 450cr. Services

13. THC_CTMSS357_Aug 0713 What’s at stake… Telecom equipmentMarket sizeGrowth per annum Wireless$2.5 mln68% Mobile handsets$2.38 mln13%^ Others*$3.97mln50% Total$8.85 mln43% Telecom services**$15.12 mln16% ^ the GSM market grew by 76.2 per cent, but he CDMA market fell by 65 per cent during the last fiscal * includes enterprise solutions and telecom software ** includes fixed line, mobile, national long-distance, international long distance, VSAT and radio trunking (Source: Business World, 26 Dec 2005)

14. THC_CTMSS357_Aug 0714 Production and Export of Telecom Equipment During 1992-1993 to 2003-2004 Figures in (Rs) crores S.NoYearProductionExport 11992-19933,98524 21993-19945,50058 31994-19957,000131 41995-19967,750310 51996-19978,300240 61997-19989,960296 71998-199910,000250

15. THC_CTMSS357_Aug 0715 Production and Export of Telecom Equipment During 1992-1993 to 2003-2004 (contd..) S.NoYearProductionExport 81999-200010,760180 92000-200112,271450 102001-200215,437150 112002-200314,400402 122003-200414,000250 Source: TEMA/ DOT

16. THC_CTMSS357_Aug 0716 R&D Spend 9 th plan 0.7% of GDP In a period 1985 to 1990 - 0.9% to 0.98% 1996-97 - 0.66% 2003- 1.0% Developed countries spend 2% to 6% of GDP on R&D

17. THC_CTMSS357_Aug 0717 R&D Spend ( some ) in India S&T departments, GOI 9 th Plan Rs. 12,022 cr. 10 th Plan ( 2000- 07) Rs. 25,243 cr. Automobiles Rs. 869 cr. 2% of sales Forma Rs. 427 (1.5% of sales) 24% or 17,000 R&D personnel (70,000) have Ph.Ds 11% or 7,700 R&D people are women

18. THC_CTMSS357_Aug 0718 Post Liberalisation & Privatisation of Telecoms R & D declined, almost nil P-Telcos & PSUs – all use imported equipment Indigenous R & D has no takers for production

19. THC_CTMSS357_Aug 0719 PSUs - HCL & HTL – Closed Shop ITI takes know-how from “all quarters of the world” [Aah nah bhadraa Kritavo yaantu Viswatah...] including from China’s ZTE & HUAWI

20. THC_CTMSS357_Aug 0720 Share of India in Global BPO & KPO Markets Year 2003-’04 2010-’11 BPO 36% 55% KPO 56% 71% Leaders: Eng. Design Basic Data Biotech & Search Pharma Integration & Mgment 400m $ 300m $ 280 Education coming up

21. THC_CTMSS357_Aug 0721 India’s Global Companies Steel, Telecoms, Pharma, Wind-power, Construction, Oil & Gas [Co-opetition with China]

22. THC_CTMSS357_Aug 0722 Over 50 globals have R & D centers in India Motorola CIT-Alcatel Nokia QUALCOM HUAWI Siemens BT...... IPR created by Indians but owned by foreign companies

23. THC_CTMSS357_Aug 0723 R & D in Engineering Institutions 1400 & Engineering colleges <100 have PG & Doctorate programs IISC, BITs, IITs, IIITs; NITs – must be developed as R & D centers.

24. THC_CTMSS357_Aug 0724 Creating IPR Learn; go up the food-chain Morph into ZTE/HUAWI/HAIET… Mission: Intellectual Property Reagan’s Funding: Chrysler (IACOCCO) SEMATEC (IBM, INTEL, Bell Labs; …Rivals’ together set up R&D to beat Japan to design and build FABs Fund Defence Research; contract Research (private sector salaries: Government Mission) Fund: IISC; IIIT’s; IITs

25. THC_CTMSS357_Aug 0725 Creating IPR (contd..) Tatas to take over C-DOT/ transform it into Bell Labs / BELCORE… Nation Telecom & I.T University(ies) National Council for Development of Information Society (NCDIS) Incubators in about 50 universities/ Research Institutes Amend TRAI/ ITA to Constitute Statutory Research Funding & Management of NCDIS India as Home for MNC’s R&D & I.P Creation

26. THC_CTMSS357_Aug 0726 India to create IPR State Intervention thro’ Defence Establishments National Board for ICT - IP creation A NASCOM ‘varsity (PG; R&D; Foreign Trade; Management) Select ‘varsities / Defence collaboration (anything from CEERI-Pilani? From CSIR’s labs?

27. THC_CTMSS357_Aug 0727 Dhanyawad: Thank You