By Kiran Karnik, President, NASSCOM
Kolkata is re-inventing itself. As an one-time resident, I find the new spelling a change, but the transformation is not just cosmetic or semantic. The very frame of discourse seems to have changed, and a new Kolkata is emerging.
Once the capital of British India, the premier center of intellectual and cultural ferment and the centre of independent India’s industrial resurgence, Kolkata lost its sheen in the last three decades. Increasingly, it – and indeed large parts of eastern India - was seen as being not friendly to trade, industry and investment. Many causes have been attributed: the freight equalization scheme, overly militant unions, step-motherly treatment by the Centre, ideology and policies of the State government. Whatever the reasons, the point is that there is baggage from the past, and it is important to acknowledge this.
West Bengal is now looking ahead. One of the promising new fields is the information technology (IT) sector. Elsewhere in the country, the IT, IT-enabled services (ITES) and Business Process Outsourcing (BPO) industry has emerged as one of the drivers of economic growth. The West Bengal government has recognized this, even if somewhat belatedly, and has been actively focusing on attracting this industry to the State especially in the last two years.
As the body that represents this industry, NASSCOM welcomes the pro-active steps taken by the State government. NASSCOM has been attempting to create new centers of growth for the industry and the interest taken by West Bengal has enthused us to work towards making Kolkata a major hub of the IT and ITES/BPO industry. In keeping with these efforts, NASSCOM – together with the ABP group – organized Infocom in 2002 in Kolkata, the first and most important such event in the eastern region. The response was excellent. It has now become a yearly event, and the 2003 edition was even bigger and better.
Meanwhile, a very positive IT policy has been announced by the government and a consultant has been hired to study the problems and suggest solutions. There is a major effort to promote the use of IT in governance and education. Software exports from the State have doubled from Rs. 604 crores in 2001-02 to Rs. 1200 crores in 2002-03. The target of 15% of the country’s IT exports by 2010 is very ambitious, but indicates the commitment and intent of the government.
For IT development, Kolkata has some inherent advantages over other cities. First, the State has a huge pool of talent to draw upon. There are 52 engineering colleges including an IIT, with more being added every year. The State has many excellent colleges and an IIM in Kolkata. West Bengal also offers IT investors one of the lowest operational costs in the country. Another strength is the low attrition rate, which – in my view - is related not so much to the supply and demand dynamics, but is embedded in the culture; people will not leave jobs for minor material inducements. In Kolkata, the attrition rate in ITES stands at less than half that in major IT centers. This, in turn, reduces the recruitment and training cost incurred by employers.
Kolkata offers about 580 mbps (megabits per second) of international satellite connectivity through Videsh Sanchar Nigam Ltd. (VSNL) and Software Technology Park of India (STPI). The State government is also planning to set up two more earth stations, at Kharagpur and Durgapur. Importantly, West Bengal is also one of the few States that can boast of being power-surplus.
The State now offers excellent physical infrastructure to IT investors - such as the STP2 in the Salt Lake IT hub and privately constructed parks like Bengal Intelligent Park and Infinity. The State also makes plots available for new IT projects at an enormously subsidised rate of Rs.40 lakh an acre (Rs.1 crore a hectare), which is 15-20 per cent of the market price.
Many IT majors - both MNCs and Indian corporates - have already set up operations in Kolkata. Some have been in the city for a few years, and are extremely pleased with the work ethic and productivity of their staff.
All this points to the changing face of West Bengal. Of late, the Government has been pro-active in industrializing the State. The retail boom in Kolkata and several district towns where malls, multiplexes and ultra modern housing complexes are springing up, highlight the change in the economy, attitudes and lifestyle.
That the State leadership is serious about once again putting West Bengal on India's industrial map is evident from the way it has been going about restructuring the Government, disciplining its large work force, seeking to change the mindset of the labour unions, ushering in tax reforms, changing labour rules, evolving various codes and so on.
For the benefit of investors, procedures under existing labour laws have been simplified to ensure smooth operations. All IT companies have been granted the status of Public Utility Service providers under the Industrial Disputes Act, 1947. They have also been awarded special status under various Acts to improve infrastructure availability.
In terms of specific areas of IT, Kolkata could carve a special place in the large and growing market for security software, because its traditional strength in statistics and mathematics makes an excellent base for work in encryption. It could also tap the large, well-educated and English-speaking human resource available in the North East.
Emerging economic opportunities thrown up by BIMSTEC (Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Cooperation) could see Kolkata once again become the premier city of East India and South East Asia. This would open up immense growth prospects for the IT/BPO sector too.
Clearly, Kolkata is set to take off in the IT sector. It has the talent and the telecommunications, which are the technology and the raw material of this industry. It has the positive ambience of an excellent policy framework and a government that seems to be committed to action.
Yet, there is need to recognize areas of concern, which must be addressed if the optimism reflected above is to be justified. The first is the need to ensure quick and efficient action. Policy pronouncements are fine, but investors want to see results: a single-window system, less bureaucracy, quick clearances and approvals. Second, no work disruptions: preferably, an all-party commitment to this. Third, “brand building”: the image of Kolkata and West Bengal, part of the “baggage of the past” referred to at the outset, needs to be re-fashioned. Fourth, a rapid improvement in infrastructure: better roads, more efficient traffic management, reliable and high quality power. Better air connectivity to international destinations would help. At the broader level, improved road, air and rail links (including through Bangladesh) to the North East are necessary to open up the hinterland - which will also provide easier access to the human resource base in the North East. A vigorous thrust to BIMSTEC will also help to boost the overall position of Kolkata, with beneficial effects on the IT/ITES industry in the city. Some of these will require major political decisions and strong political will on the part of the State leadership.
With these initiatives, Kolkata has the potential of not only becoming a major IT hub, but also of regaining its past glory and taking on a new avatar of a knowledge capital.
