Budget 2014: Finance Minister recognises software industry potential

The fact that the finance minister specifically underscored the Software Product Industry in his maiden budget speech, is testimony enough of the government’s resolve to make significant and dramatic changes to achieve rapid economic development. Here are two reasons why we believe the government is moving in the right direction. One, Empowering the masses. There is no reason why software products cannot make an im-pact across various sectors in the economy including agriculture, education and healthcare.

Software products can provide platforms for improvement in government functioning and effectiveness whether it be the issue of birth certificates or facilitating financial inclusion. They can help provide better healthcare and education.

Software product capabilities could in the long run help our security and defence as well.

Two, Promote Product Thinking. Success in software products could help promote product thinking in other industries as well. A healthy software product industry is also pivotal to developing our defence, Aerospace and Electronics industries.

It is also necessary for creation as well as maintenance of strategic technologies that are critical to national security.

The advantage of focusing on software products first is that unlike many other product categories (like drugs or semiconductors), the upfront investments are much more manageable, and we already have the talent base and skills to get going. But why is product thinking crucial? Because it makes possible the capture of value within our country.

According to one estimate, Apple earns $368 on every $560 iPhone.

In contrast, Foxcon’s margin on every iPhone that it manufactures for Apple is less than $15. We need to change from “India Inside” to “India: Product Nation” so that we can appropriate a significant part of the value created by our talented designers, engineers and scientists.

Keep in mind that India is already a global player in software products and has the potential to be one of the global leaders in this important industry.

Fortunately, the government recognises this potential as Mr. Jaitley clearly said: “There is an imminent need to further bridge the divide between digital “haves” and “have-nots”. Companies like Tally, Zoho, Inmobi and QuickHeal have created market leadership in their own segments.

With a little effort, India can emerge as one of the dominant players in several categories of the global software product industry.