First Principles | Without building hardware, India’s tech dreams are just that
To future-proof India’s software technology prowess, why isn’t India thinking as a “hardware product nation” as well?
Most narratives have it that the transition to ‘Make in India’ in on in full swing. But on a video call with Ajai Chowdhry, after the launch of his book Just Aspire, it’s clear that the Make-in-India narrative has much ground to cover, replete with fractured attempts to get it going. “Every Indian state is now thinking of setting up semiconductor plants. It is ridiculous. This should have happened 20 years ago,” says an exasperated Chowdhry. Why not, he asks, focus on building a cluster at one place instead where high-tech products such as these can be created and shipped out in the least possible time with little to no friction.
There’s another argument difficult to ignore. There is no contemporary hardware that has less than 30% software embedded in it. So, to future-proof India’s software technology prowess, why isn’t India thinking as a “hardware product nation” as well? India continues to think of itself as a “software product nation.” Long story, that one.
Chowdhry earned his spurs after co-founding HCL in 1976 with six others that include Shiv Nadar and Arjun Malhotra. Their stated mission then was to build a computer to rival Microsoft and Apple. Those were the days when most Indians didn’t know what these devices could do, a start-up ecosystem did not exist then, and the know-how to build hardware and software was non-existent. But this bunch beat the odds and built the MiniComp.
While Steve Jobs and Bill Gates were beginning to get seen all over the place, only those who understood computing knew HCL and Nadar and his co-founders had the muscle. That is why through the late 70s and early 80s, Chowdhry credits Nadar with building one of the most well-oiled sales machinery any technology company could have. They sold to institutions such as IITs, gained access to markets in Far East Asia, and finally planted its flag in the American market in the early 1990s.
That is also when the brakes had to be applied on HCL’s hardware dreams. Chowdhry talks wistfully about it. India was staring at a serious forex crisis and one of the downsides of that was that most companies did not have the forex to procure components to build their products. Another hitch they ran into was that their advisors at McKinsey had impressed upon them the need to go to the US because of the potential that existed there. What HCL did not know was that the power equipment inside the machines they built needed approvals from American authorities. If injury needed salt, the client who had placed orders from them got taken over. Between all of this, the investments they poured to set up factories in Silicon Valley started to look unviable. And ICICI Bank from which HCL had borrowed money, began asking for the loans to be repaid. Something had to be done.
Nadar took a call and told companies in Silicon Valley that HCL had trained engineers whom he could offer for cheaper than their American counterparts. Some bit the bait. That was the beginning of onshore work or “body shopping” as it was condescendingly known then. But it started to bring in the revenues and HCL got into the software business. Over time, as trust got built, the American stopped insisting work be done on their campuses and the engineers could be shifted to India. This is what we now know as off shoring.
And while there are multiple narratives about how India is now a tech super-power, Chowdhry is unwilling to buy this until the hardware manufacturing evolves, and India takes on China.
But Indian policymakers, he laments, move tentatively against China because they fear the repercussions. “We are dependent on China for everything from electronic components to pharma. We believe if we work with Taiwan, China will create trouble. Nobody wants to deal with that. But Taiwan is the best country to partner with. They created Brand China in electronics after all.”
And if one more reason is needed, he points to the software unicorn that is Zoho which works out of a village in Tamil Nadu. “If Zoho can do that in software, what stops us from building a hardware ecosystem deep inside India?” Nothing, actually.