From Legs to Minds – ” On Software industry in India”

Synopsis: Regulatory simplicity allowed Indian software services and start-up ecosystems to flourish. Hence, to grow, India needs to cut regulatory cholesterol and spend the next 25 years unleashing the entrepreneurial energies of 1.3 billion Indians.


In 1893, during a sea journey to attend the World Parliament of Religions and a Technology Expo, Swami Vivekananda convinced Jamsetji Tata that technology can be imported, but scientific temper cannot be bought and must be built within a country.

Evolution of the Indian software industry:

Role of Jamsetji: Jamsetji set up the Indian Institute of Science in Bangalore. Technology-encouraging culture at the Tatas pioneered India’s software industry in the 1960s.

Software exports: India now exports more software than Saudi Arabia does oil. Covid and recent Chinese events have increased India’s attractiveness to global investors.

Big reforms: like GST, MPC, and IBC. The PM announced on Independence Day that 15,000 of our current 69,000+ employer compliance and 6000+ filings have been identified for removal. This abolition will accelerate formal employment and reduce corruption.

Why did the manufacturing and software industries develop differently?

Regulatory cholesterol: It is one of the reasons why it took 72 years for 1.3 billion Indians to cross the total GDP of 66 million Britishers.

Role of SEZ and STPI: STPI’s genius was simplicity. It allowed rebadging existing assets, embraced trust over suspicion, and adopted self-reporting that was largely paperless, presence less, and cashless.

SEZs largely replicated the regulatory cholesterol and distrust that has made India an infertile habitat for employment-intensive industries.

How has regulatory simplicity resulted in the development of the Indian service sector?

India’s software services and tech startups are built on openness, consistency, and fairness. China’s magnificent 80 times rise in per-capita GDP over 40 years has also been built on these principles.

Development economics outlier: Few models predict a $2,500 per-capita income country with five million people writing software, internet data costs per GB at 3 percent of US levels, 1.2 billion people empowered with paperless digital identity verification, and a $3 trillion public market capitalization.

High productivity: 0.8 percent of India’s workers generate 8 percent of GDP. The mandatory global digital literacy program and digital investment super-cycle sparked by Covid in education, medicine, shopping, office work, payments, restaurants, and entertainment will double our software employment in five years.

Hub of start-ups: India’s software industry’s talent, alumni, and startups have raised over $90 billion since 2014 from 500+ institutional investors.

India’s software services industry and tech startups each are estimated to be worth about $400 billion today. By 2025, India’s startup universe value will grow to $1 trillion.

Key suggestions:

First, build on the resources represented by our young because, without their involvement, we cannot succeed.

Second, to increase our prosperity we need massive formal, non-farm job creation, regulatory trust, and simplicity that our technology industry enjoys in the rest of our economy.

Source: This post is based on the article “From Legs to Minds” published in India Express on 3rd September 2021.

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