'Entrepreneurship needs to be taught'

In the '90s, the Indian software industry took the driving seat in giving a push to the country's exports after government reforms offered offshore tax concessions and made it easier to set up sales offices outside India. However, the hardware sector, or the core semiconductor segment was largely overlooked.

Almost 20 years later, the government is thinking of setting up a semiconductor manufacturing fabrication plant (fab) and establishing a VC fund for the sector. Industry bodies like Indian Electronics and Semiconductor Association (IESA) have been talking to the government on what more could be done to create opportunities for the hardware sector.

 In a conversation with Shayan Ghosh of Deccan Herald, founder of India's homegrown IT firm HCL Ajai Chowdhry, also a member of the information technology hardware task force of the government says that the need of the hour is to teach students on how to become an entrepreneur. He also reveals a lesser known fact that in India the total percentage of value addition in manufacturing is not more than 10 per cent.
 
Since you stepped down from HCL Infosystems last year, how has life been so far?
Well, actually it was a planned move. I had decided in 2009 to step down, therefore it was planned to bring in a new CEO in 2010 and my job was over pretty much by 2012, so that’s when I decided to go off. For the last 10-11 years, I have spent a lot of time on electronics and my thinking has always been that software got a lot of impetus in the country, whereas hardware never got the same push it needed.
I was part of close to three committees of the government and finally in 2009, a committee I chaired for electronics made some recommendations which have now been accepted. I decided that I would continue to work on the electronics segment and so I work on many government committees, like the one on electronics R&D.
I also work with the Department of Electronics and Information Technology on initiatives where the implementation of the electronics policy is finally happening.
So that's what I have been doing working on the future of the country's electronics.
 
Your views on entrepreneurship in India and what are you doing to revive it?

Being an entrepreneur myself, I felt that the time has come for me to now give back my learning to startups. So much before I actually stepped down as chairman, I joined Indian Angel Network as an investor and have invested in 12 startups till date, mostly technology startups. In some, I am deeply involved, in some I am a mentor and in the rest I just give inputs and help them in whatever they need, mainly in the form of connections. This apart, I also felt that participating in some of the incubation activities is important as they are the places where startups come from.
I was earlier chairman of IIT Hyderabad and we worked on a strategy to introduce entrepreneurship as a subject. None of the IITs in the country has entrepreneurship being taught (as a subject) and I was very clear that unless it is taught, people would not know how to start a business. The director agreed to start a minor (elective subject) in entrepreneurship. For example, someone can take a major in electronics and a minor in entrepreneurship and the course runs for a year from the 3rd-4th year. It was started last year and I teach there; I have also got some of my industry friends to deliver lectures to students there.
 
What do you think of the semiconductor sector in India?

There has been lot of progress and we are seeing a very interesting future ahead. One of the recommendations we made to the government and which has been accepted is that we should create a complete ecosystem around the semiconductor industry in the country. The most important part of that ecosystem, which does not exist here, is that there is no fab, and whatever fab is there, is very old-fashioned and outdated.

The government accepted that and came out with an RFP (request for proposal) and in the next 30-60 days, I suppose they are now going to announce the organisation selected for setting up the fab. There are some private companies that have bid for it; the government will also invest a lot into that fab. However, there are a lot of fabless companies in India who actually do a lot of design work (VLSI) but the actual chip is made abroad.
 
How important is R&D in the field of electronics?

We had also made a recommendation that there should be a complete environment for more and more R&D in India for electronics. One of them was to create an electronics development fund (initial corpus of Rs 5,000 crore), which is still in the process. A couple of projects have started to come and some global funds have shown interest. The whole idea is that if such funds can help small startups then it would spur more and more R&D.

And if a fab comes up in India, the fab-less companies that design a lot chips can send their designs to the fab and get it manufactured. The key value-addition should happen in India and this requires lot of R&D. For example, in Apple products, the design work is done in the US but it is manufactured in China. Similarly in India too the focus should also be on extensive R&D and design.
 
Do you think VCs should now focus more on hardware startups than the traditional software ones?

That is the reason we proposed the electronics development fund to the government because most of the VC funds in India are focused on software and information technology and have no idea about hardware. However, initially the lead will have to be taken by some global organisations, because in Silicon Valley there are people very familiar with hardware and they fund a lot of them. Mostly, lack of knowledge of the hardware segment in India is the reason VCs are not keen on hardware.
 
What are your expectations from Budget 2013-14?

There is still a lot of inverted duty in some of the chain of manufacturing. Fundamentally, what that means is that the finished product has a lower duty than the input that has gone into it. Also, inverted duty is there on a lot of products manufactured in India, not just electronics. So the recommendation made to the government is to correct that.