Using Information and

Communication Technologies to
Boost India’s Competitiveness

Irene Mia, World Economic Forum

World Economic Forum
Geneva, Switzerland 2010

Using Information and

Communication Technologies to
Boost India’s Competitiveness

Irene Mia, World Economic Forum

This paper is published by the World Economic
Forum within the framework of the Centre for Global
Competitiveness and Performance.

AT THE WORLD ECONOMIC FORUM

Professor Klaus Schwab

Founder and Executive Chairman

Robert Greenhill
Managing Director and Chief Business Officer

Editor
Irene Mia, Director, Senior Economist

CENTRE FOR GLOBAL COMPETITIVENESS AND PERFORMANCE

Jennifer Blanke, Director, Lead Economist,

Head of the Centre for Global Competitiveness
and Performance
Ciara Browne, Associate Director
Roberto Crotti, Junior Quantitative Economist
Margareta Drzeniek Hanouz, Director,
Senior Economist
Thierry Geiger, Associate Director, Economist
Pearl Samandari, Community Manager

ASIA REGIONAL AGENDA TEAM

Sushant Palakurthi Rao, Director and Head of Asia

Clara Chung, Community Manager, Global
Leadership Fellow
Fabien Clerc, Community Manager, Global
Leadership Fellow
Anne-Catherine Gay des Combes, Community
Relations Manager
Béatrice Laenzlinger, Senior Community Relations
Manager
Jaeyoung Lee, Community Manager, Global
Leadership Fellow
Christoph S. Sprung, Senior Community Manager

The editor would like to extend a special thank you to

Hope Steele for her excellent editing work and Pearl
Jusem for the graphic design and layout.

World Economic Forum

91-93 route de la Capite
CH-1223 Cologny/Geneva
Switzerland
Tel.: +41 (0)22 869 1212
Fax: +41 (0)22 786 2744
E-mail: contact@weforum.org
www.weforum.org

Copyright © 2010 World Economic Forum

All rights reserved. No part of this publication may be

reproduced, stored in a retrieval system, or transmitted,
in any form or by any means, electronic, mechanical,
photocopying, or otherwise, without the prior permission
of the World Economic Forum.

ISBN-13: 978-92-95044-94-4
ISBN-10: 92-95044-94-0
Contents

Preface v

Using Information and Communication 1

Technologies to Boost India’s
Competitiveness
by Irene Mia, World Economic Forum

Appendix 1: Composition and Computation of 45

the Networked Readiness Index 2009–2010

Appendix 2: India’s Networked Readiness Profile 47

iii
Preface
ROBERT GREENHILL
Chief Business Officer, World Economic Forum

Following the adoption of important market reforms We hope that the insights of this paper will
in the 1990s, India has experienced sustained growth, contribute to discussions and initiatives leading to
emerging as a global player in a number of areas, not generating concrete priorities for action and long-term
least the services industry.Yet the country continues to strategies to foster India’s development and prosperity for
face important development challenges, including high all its citizens.
poverty levels, widespread income and regional disparity, We would like to convey our sincere gratitude
and major infrastructure flaws. to the respected academics and industry experts who
Acknowledging the enabling role information contributed insightful pieces to this paper, delving into
and communication technologies (ICT) plays in different dimensions of India’s networked readiness
fostering productivity and societal modernization and and ICT development. We especially wish to thank the
in improving living conditions and opportunities for editor of this paper, Irene Mia, for her leadership and
citizens, the Indian government’s development strategy commitment. Appreciation also goes to Jennifer Blanke,
of the last two decades has focused heavily on ICT Head of the Centre for Global Competitiveness and
development both as a target sector and a growth Performance, as well as her team: Ciara Browne, Roberto
catalyst for the economy at large. The results have been Crotti, Margareta Drzeniek Hanouz, Thierry Geiger, and
remarkable, with the emergence of a world-class IT Pearl Samandari; and to Sushant Palakurthi Rao, Head of
sector that exports software and services all over the Asia, all at the World Economic Forum. Last but not least, v
world, as well as sustained ICT penetration growth, we would like to express our gratitude to our network
especially for mobile telephony, making India the of 150 Partner Institutes around the world and to all the
second-most dynamic mobile telephony market globally, business executives who participated in our Executive
after China. ICT has also been essential to improving Opinion Survey, without whose valuable input the
service provision and reaching out to the less-advantaged production of this paper would not have been possible.
segments of the population, especially in rural areas.
At the same time, the country continues to lag behind
in ICT penetration rates vis-à-vis regional and other
relevant comparators. Moreover, although national actors
display a remarkable preparation and willingness to use
ICT in their daily activities, ICT revolutionary power
is not fully leveraged by all the citizens, by the business
sector to develop further its innovation potential, or by
the government in providing better and more accessible
services and promoting broader participation.
The paper Using Information and Communication
Technologies to Boost India’s Competitiveness builds on the
methodology and findings of the Networked Readiness
Index 2009–2010, featured in the World Economic
Forum’s Global Information Technology Report 2009–2010,
to analyze India’s advances and challenges related to
ICT development for increased competitiveness and
the creation of a truly networked society. By advancing
the understanding of India’s competitive strengths and
weaknesses in networked readiness, this paper provides a
useful platform for a society-wide dialogue and a unique
tool for policymakers, business leaders, and other relevant
stakeholders to use in prioritizing actions and policies to
fully tap the potential of ICT to address India’s pending
development challenges.

Using Information and
Communication Technologies
to Boost India’s
Competitiveness
IRENE MIA, World Economic Forum
Using Information and Communication Technologies to Boost India’s Competitiveness
Since the 1990s, India has been one of the world’s
fastest-growing markets, increasingly establishing itself
as a global economic power. India now boasts the
world’s second-largest population and the fourth-largest
GDP when measured at purchased power parity, just
behind the United States, China, and Japan.1 Yet, by
many accounts, India remains a poor country, system-
atically lagging behind China and many comparable
emerging economies in several measures of economic
and social performance. In 2009, its GDP per capita was
just US$1,000, similar to that of Vietnam but half of
Indonesia’s, and less than a third of China’s. As of 2005,
some 42 percent of its population still lived below the
extreme poverty line of US$1.25 a day. Although this
represented a reduction from 54 percent in 1988, in
absolute terms the number of extremely poor people
had actually increased. Over the same period, extreme
poverty in China dropped from 54 percent to 16 percent.
Further, India ranked a low 134th out of 182 economies
in the United Nations’ Human Development Index 2009,2
far behind China (92nd), but also Indonesia (111th) and
Vietnam (116th). Life expectancy in India is 64 years, 8
years less than in China, while the infant mortality rate
is three times China’s rate. The literacy rate among the
adult population is barely 60 percent, whereas China,
Indonesia, and Vietnam boast rates of 90 percent or
more.3 Significant social disparities, poor public health, 1
limited access to education, and underdeveloped infra-
structure are among the many flaws highlighted by a
recent study by the World Economic Forum on India’s
competitiveness; these problems may constrain the
country’s sustainable long-term growth.4 Despite the
important progress that has been made in recent decades,
India continues to face diverse and formidable develop-
ment challenges, not least its huge income and regional
disparities, with a stark contrast between thriving urban
centers and struggling rural areas.
Recognizing the key enabling role information and
communication technologies (ICT) can play in fostering
productivity, societal modernization, and better living
conditions and opportunities for citizens, the Indian
government’s development strategy over the last 20 years
has included ICT development as a crucial element.
Particularly since the World Market Policy and the
establishment of the Software Technology Parks of India
(STPI) scheme, adopted in 1988, the government has
focused on software development for export as well as on
telecommunications policy reforms and privatization.5
These developments have gone hand in hand with a
more general economic deregulation and the market
opening process that began in the early 1990s, which
significantly lowered barriers to foreign investment.
Together, these actions have spurred the dynamic
growth of a world-class IT sector, which has become
The author would like to thank Soumitra Dutta and Thierry Geiger for
their useful inputs and comments and Roberto Crotti for the background
research for this paper.
Using Information and Communication Technologies to Boost India’s Competitiveness
particularly successful in exporting software and services
(including system integration, IT consulting, application
management, software testing, and Web development,
among others).6 The sector’s revenues in the financial
year 2008–09 accounted for 5.8 percent of Indian GDP,
up from 1.2 percent 10 years before. In particular, India
has emerged as the world leader in IT-enabled services-
business process outsourcing (ITeS-BPO), accounting
for 50 percent of total world market at the end of 2008.7
Total revenues of the domestic and export IT sector
represented US$47.8 billion in 2007, an impressive
tenfold increase from 1998, while turnover was expected
to reach US$80 billion by 2011.8 Moreover, Indian IT
firms have shown their resilience by weathering the
recent global economic crisis and consequent recession
fairly well, through new product development and
reorientation to new export markets. On a related note,
the opening and reform of the telecommunications
sector in the 1990s, reinforced by the adoption of
the Telecommunications Regulatory Authority of
India in 1997, significantly boosted the growth of
telecommunications in the country. India’s mobile
market is currently the second largest (after China) and
among the most dynamic in the world, with over 600
million subscribers in 2010 and mobile penetration
of 43.8 percent in 2009 as opposed to 0.2 percent in
2 1999.9 Moreover, thanks also to the strong inflow of
foreign direct investment (FDI) into the sector, a national
telecommunications equipment manufacturing industry
is emerging.
ICT has now permeated the whole Indian
economy, acting as a growth catalyst in areas such as
real estate, automobiles, Travel & Tourism, infrastructure,
and mortgage banking industries. In addition, it has
contributed to better governance, government efficiency,
and service provision.
The Networked Readiness Index (NRI), featured in
the World Economic Forum’s Global Information Technology
Report series, provides a methodological framework for
gauging how countries are leveraging ICT for increased
growth and development. The NRI is the product of a
decade-long joint research project between the World
Economic Forum and INSEAD, providing a deep-dive
perspective on the impact of innovation and ICT on
competitiveness. The NRI is particularly useful as a
lens through which to analyze India’s progress as well
as its challenges in recent times as these relate to ICT
development and usage by individuals, the business sector,
and the government.
This paper will therefore use the latest computation
of the NRI, included in The Global Information Technology
Report 2009–2010, along with NRI time series
stretching back to 2002, to assess the country’s current
networked readiness and its advances over the last decade.
Comparisons with relevant countries and regions will
be made to put India’s performance into context, and
to suggest best practices of its peer group that might be
emulated. The paper will also provide a comprehensive
snapshot of India’s current networked readiness through
the methodological framework of the NRI, with
special attention to areas of particular significance
for the country. It is hoped that this will shed some
light on the competitive strengths of the country in
leveraging ICT for increased growth and prosperity
and on the weaknesses that need to be addressed, as a
priority, in the government’s agenda and by India’s main
stakeholders. A brief analysis of India’s evolution in the
NRI rankings and in selected dimensions of usage will
be carried out to set the country’s performance into a
historical context.
The networked readiness framework and methodology
Figure 1 outlines the framework underlying the NRI
and assessing countries’ readiness to partake fully of the
benefits of the latest ICT advances. This framework was
introduced in 2002 and it has been kept stable since
then, allowing for meaningful comparisons over time.10
It rests on three broad theoretical assumptions:
• The environment is key: Networked readiness
does not develop in a vacuum, but it requires
the existence or establishment of a conducive
environment, with an innovation-friendly market
and supportive regulatory and infrastructure
components.
• Leveraging ICT is a society’s joint effort and
responsibility: A conducive environment is a
necessary but not sufficient condition for a
country to reach high levels of networked
readiness. The government has a crucial role to
play in setting the vision for ICT diffusion and its
importance in the overall national competitiveness
agenda, but society at large must also do its part
by using ICT and innovating. Countries such as
Korea, Israel, Singapore, and Estonia have managed
to successfully leverage ICT to transform and
modernize their economies and societies, thanks
to a joint vision and effort among the government,
the business sector, and individuals.
• ICT usage is correlated with ICT readiness: The last
assumption is that the actual usage of ICT by the
government, the business sector, and individuals
is influenced by the propensity and degree
of their ICT preparedness. The link between
enablers and usage comes from prior research in
the management literature, where all models of
total quality management distinguish between
“enablers” and “results.”11
The framework illustrated in Figure 1 translates
into the NRI, whose three main building blocks or
subindexes (environment, readiness, and usage) comprise
a total of 68 variables, regrouped into the following
nine pillars:

Figure 1: The Networked Readiness Index 2009–2010: The framework
Component subindexes
Environment
Networked
Readiness
Readiness Index
Usage
Source: Dutta et al., 2010.
The market environment pillar (11 variables) assesses
the business environment for ICT development and
diffusion in any given economy, including the availability
of appropriate financing sources (in particular venture
capital), the extent of business sophistication (as captured
by cluster development), the ease of doing business
(including the presence of red tape and fiscal charges),
and the freedom of exchanging information over the
Internet (proxied by the freedom of the press).
The political and regulatory environment pillar (10
variables) gauges the friendliness of the regulatory
framework for innovation and ICT development in a
country. It captures general aspects having to do with the
protection afforded to property rights, the independence
of the judiciary, and the efficiency of the law-making
process, as well as more ICT-specific features, notably
the development of ICT laws, protection of intellectual
property—key to generating innovation—and the level
of competition in Internet, international long distance,
and mobile telephone services.
The infrastructure environment pillar (9 variables)
captures the quality of the national ICT-related
infrastructure, both in its hard features (namely the
number of telephone lines and secure Internet servers,
electricity production, Internet bandwidth, and
accessibility of digital content) and softer ones related
to the availability of skilled human resources (assessed
by combining variables such as tertiary enrollment
rates, education expenditure, the quality of scientific
research institutions, and the availability of scientists
and engineers).
Using Information and Communication Technologies to Boost India’s Competitiveness
Pillars
Market environment
Political and regulatory environment
Infrastructure environment
Individual readiness
Business readiness
Government readiness
Individual usage
Business usage
Government usage
The individual readiness pillar (8 variables) assesses
citizens’ preparedness and inclination to use ICT in a 3
comprehensive set of dimensions, including the quality
of the educational system (notably math and science
education), residential telephone connection charges,
and monthly subscription costs, as well as tariffs for fixed
broadband and mobile and fixed telephony.
The business readiness pillar (10 variables) measures
the degree to which firms are prepared and ready to
incorporate ICT into their business operations and
processes. This pillar includes variables such as the
quality of on-the-job training, spending on research
and development (R&D), and collaboration between
academia and the industry—which is key to fostering
applied innovation and intrinsic to well-developed
clusters—as well as the quality of suppliers in the
economy and the affordability of ICT for business.
The government readiness pillar (3 variables) provides
insight into the government’s vision and the way ICT
is prioritized in the national competitiveness strategy,
including the extent to which public procurement of
high-tech products is used to stimulate efficiency and
innovation.
The individual usage pillar (5 variables) gauges ICT
penetration at the individual level, measuring the number
of mobile and broadband Internet subscribers, Internet
users, and personal computers (PCs), and assessing
Internet access in schools.
Using Information and Communication Technologies to Boost India’s Competitiveness
The business usage pillar (7 variables) captures the
business sector’s capacity to generate innovation by
looking at the prevalence of foreign licensing, the
capacity for innovation (including the number of utility
patents per 100 population, high-tech exports, and
creative industry exports as a percentage of total exports
of these industries), and the extent to which businesses
use the Internet in their daily transactions and operations.
The government usage pillar (5 variables) captures
the implementation of the government’s vision for
ICT together with actual government ICT usage in
providing services to citizens and promoting inclusion
and participation. Government’s success in promoting
ICT penetration, e-participation, and the development
and quality of e-government services are some of the
dimensions taken into account.
In terms of NRI computation, we assume that all
Index components contribute similarly to the national
networked readiness of countries. Therefore the scores
of the environment, readiness, and usage subindexes are
combined as a simple average to create the final NRI
score. In turn, each subindex’s score is a simple average
of those of the composing pillars. Full details of the
methodology and variables included in the NRI 2009–
4 2010 can be found in Dutta et al., as well as in Appendix
1: Composition and Computation of the Networked
Readiness Index 2009–2010, at the end of this paper.12
In line with the World Economic Forum’s
competitiveness work and past Reports, the NRI
is composed of a mixture of quantitative data and
survey data. The quantitative data are collected by
international organizations such as the International
Telecommunication Union (ITU), the World Bank, and
several agencies of the United Nations (UN)—including
the United Nations Educational, Scientific and Cultural
Organization (UNESCO). The survey data capture
qualitative dimensions relevant to networked readiness,
such as the quality of the educational system, companies’
R&D spending, the protection of intellectual property,
and the availability of venture capital and of scientists
and engineers. These data are derived from the Executive
Opinion Survey that the World Economic Forum
conducts every year in over 130 countries from the
developed and developing world, representing more than
98 percent of the global GDP. Top business executives
are asked to assess different aspects of their business
environments. Box 1 provides more information on the
Executive Opinion Survey’s methodology.
Of the 68 variables included in the NRI 2009–2010,
29 (43 percent) are quantitative data from international
sources and 39 (57 percent) are perception indicators
from the Executive Opinion Survey.
Setting the context: A look at the state of ICT diffusion
in India
Over the last decade, India has emerged as one of the
most important and dynamic telecommunications
markets in the world. In particular, the country is
now the second-largest (after China) and among the
fastest-growing mobile markets globally, with over 600
million subscribers in April 2010, adding 10–15 million
subscribers per month in 2009 and 2010.13
Figure 2 displays the evolution of mobile telephone
penetration in India from 1995 to 2009 vis-à-vis Brazil
and China, as well as the averages for countries in both
the Organisation for Economic Co-operation and
Development (OECD) and Developing Asia.
In 2009, India’s mobile tele-density of 48.8 percent
was still the lowest in the comparator sample: far from
the OECD’s more than universal coverage (115.3), but
also well behind Brazil (89.8 percent) and the Developing
Asia average (67.5 percent). At the same time, the growth
rate of mobile penetration experienced in the country
over the last 10 years has been impressive. While mobile
penetration grew in the 1995–2009 period by an annual
average of 26, 32, 45, and 51 percent in the OECD,
Developing Asia, Brazil, and China, respectively, it grew
by a remarkable 98 percent in India. This encouraging
trend bodes well for an increased and more inclusive
mobile telephony diffusion going forward, which one
hopes will begin to integrate the rural areas that now lag
behind the cities. The important economic and social
benefits associated with mobile telephony make clear
the immense potential its diffusion can have in terms of
reducing poverty and bridging the digital divide.14 Box
2, authored by Sadagopan Singam of Mahindra Satyam,
explores IT’s contribution to India’s economic growth in
greater detail.
Mobile penetration received a considerable boost
from the major liberalization process undertaken by the
telecommunications sector from the 1990s onward. As
will be discussed more fully below, mobile services, fixed
line, and long distance services were opened to private
competitors in 1992, 1994, and 1999, respectively.
FDI in the mobile telephony sector has been an
important driver of increased mobile diffusion, surging
from US$116 million in 2003–04 to US$521 million in
2006–07.15 In 2006, a foreign telephone company, AT&T,
obtained international and national long distance licenses
for the first time, thanks to the new FDI guidelines that
allowed 74 percent foreign ownership. It has grown
rapidly ever since, notably serving the multinational
enterprise customer market. FDI in the sector has also
helped India increasingly to affirm itself as a competitive
telecommunications equipment manufacturing center.
If the boom in mobile telephony is undeniably
a positive development, it also reflects, to a certain
extent, the poor and deteriorating state of fixed line
infrastructure and communication quality. Indeed, fixed

Box 1: The Executive Opinion Survey
THIERRY GEIGER, World Economic Forum
To compute the Networked Readiness Index (NRI) rank-
ings, the World Economic Forum (the Forum) draws its data
from two sources: international organizations and national
sources, and the Forum’s Executive Opinion Survey (Survey).
The Survey is a one-of-a-kind tool for capturing timely and
vital information that is not available on a global level or a
comparable basis through other sources. The data gathered
thus provide a unique source of insight and a qualitative por-
trait of each nation’s economic and business environment.
As explained in the text, out of the 68 variables that compose
the NRI, 39 indicators come from the Survey.
This Survey is conducted annually by the Forum in over
130 countries, including all those covered by the Networked
Readiness Index. The respondents are business executives
who are asked to assess specific aspects of the business
environment in the country in which they are based. The
Survey comprises a special section on information and
communication technologies, which is used to compute a
number of indicators composing the NRI.
For each question, respondents are asked to provide their
opinions about the situation in their country of residence,
compared with a global norm. To conduct the Survey in
each country, the Forum relies on a network of 150 Partner
Institutes. Typically, the Partner Institutes are recognized
economics departments of national universities, business
schools, independent research institutes, or business asso-
ciations. The Confederation of Indian Industry (CII) has been
our Partner Institute in India for a number of years.
To ensure that the sample of respondents is selected
in a consistent manner around the world, a detailed set
Figure 2: Mobile subscriptions per 100 population: India vs. selected comparators, 1995–2009
150.0
OECD
Brazil
Developing Asia
112.5 (excluding India)
China
India
75.0
37.5
0
1995 1996 1997 1998 1999 2000
Source: ITU, 2010.
Using Information and Communication Technologies to Boost India’s Competitiveness
of guidelines has been developed by the Forum for the
Partner Institutes that allows them to target top manage-
ment business executives. In addition to relying on Partner
Institutes to collect surveys in their respective countries,
the Forum’s member companies are also invited to partici-
pate in the Survey. Sample sizes vary according to the size
of the economy. In 2009, a record total of 12,614 responses
were collected.
Once the data are entered into the Forum’s database,
they are subjected to a rigorous quality control process.
Following a careful verification of the Survey dataset,
individual responses to each question are aggregated
at the country level and combined with results of the
previous year, using a weighted moving average approach.
The weighting scheme is composed of two overlapping
elements: on one hand, we give each response an equal
weight by placing more weight on the larger of the two
samples of responses; at the same time, we apply a dis-
count factor to the previous year’s results, thereby placing
more weight on the most recent responses.
The final country scores thus obtained are used in
the computation of the NRI and other benchmarking tools
developed by the Forum, including the Global Competi-
tiveness Index. For more information about the Survey’s
process and methodology, see Browne and Geiger.1 5
Note
1 Browne and Geiger, 2009.
2001 2002 2003 2004 2005 2006 2007 2008 2009
Using Information and Communication Technologies to Boost India’s Competitiveness
Box 2: The IT industry contribution to economic growth in India
SADAGOPAN SINGAM, Mahindra Satyam
The Indian information technology (IT) and IT-enabled
services-business process outsourcing (ITeS-BPO) industry
has made significant contributions to India’s economic
growth in terms of GDP increase, foreign exchange earn-
ings, and employment generation. It has been the trigger
for many “firsts” and has contributed not only to unleash-
ing the hitherto untapped entrepreneurial potential of the
Indian middle class but also to taking Indian excellence to
the global market. In this sense, the sector’s contribution to
the country’s GDP has been steadily increasing, rising
from 1.2 percent in 1998 to above 5 percent today. Export
earnings have risen as well, to reach approximately US$60
billion in 2009. Last but not least, 3.5 million workers are
expected to be directly employed in the sector by end of
2010–11, growing at a compound annual growth rate of 26
percent in the last decade, making it the largest employer in
the country.
Besides directly impacting the country’s economic
growth, the sector is also having a multiplier effect across
industries and indirectly contributing to the national
economy and to better living conditions in a variety of ways.
The rest of this box will explore this second, indirect type of
impact more in detail.
6 Techtonic shifts: Multiplier effects across industries
The Indian IT professionals are youthful, affluent, well
educated, and optimistic, with an average per capita income
of about 18 times the national average and an average age
of 27.5 years.1 IT professionals are fueling an accelerated
demand growth for automobiles, consumer durables, hotel
rooms, air travel, better healthcare, and new modes of enter-
tainment. The IT workforce accounts for only 3 to 4 percent
of India’s organized labor pool, but these workers are likely
to account for 13 percent of additional car demand in 2010;
20 percent of additional domestic air travel; and 33 percent
of multiplex cinema demand. Meanwhile, the IT fraternity
spends roughly US$1 billion each year on eating out, their
average monthly mobile telephone bill is almost three times
the national average, and their mobile handset replacement
rate is four times the national average.
Home ownership among IT professionals in the 28- to
35-year-old age group is three times that of the sub-28 age
group. This ratio doubles again for those over the age of 35,
with more than half of this group living in their own houses.
Fifteen percent of employees in this age group have at least
two cars, implying the rise in discretionary spending power
that accompanies career progression.
Understandably, the savings and investments of Indian
IT professionals are also substantially higher and more
sophisticated than average. Insurance penetration within
the group exceeds 80 percent, versus the national average
of 5 percent. The likely demand for residential space from the
IT legion alone will be 600–650 million square feet—making
the global real estate giant Cushman & Wakefield’s projec-
tion of 850 million square foot residential demand for the
three years 2007–10 appear quite understated. More than
36 percent of IT professionals consider investment in real
estate to be an attractive option, suggesting a high demand
in this group for second homes.
The IT employee is far less risk-averse than other work-
ers, signifying a rapid change in the pattern of household
borrowings and savings. Their share of savings in equi-
ties (stocks and mutual funds) is 18 percent, versus the
national average of just 1.1 percent. Indeed, IT profession-
als account for 20 percent of all online trading accounts
opened with brokerages in the past four years. About 75
percent of IT professionals have at least one credit card,
40 percent have more than two, and 14–25 percent have a
mortgage and/or auto/personal loan. These professionals
are likely to account for more than one-sixth of new home
loans in 2007–10.
Every IT job creates at least 1.4 other jobs in the
economy—from domestic help to drivers, carpenters, and
cooks, demand for workers is rising and, to a measurable
extent, this is being fueled by the growth in IT jobs. The
creation of less-skilled jobs is contributing to poverty
reduction, the only sustainable way in which this could be
done. Meanwhile, strong demand for engineers and sci-
ence graduates is having a ripple effect on wages in other
sectors as well, as the rising tide lifts all boats.
The government, too, benefits, because IT employees
make up about 5 percent of tax payers, with incremental
personal taxes paid by IT professionals likely to account
for 13.5 percent of personal income tax collection growth
in the next three years. An IT employee’s per capita tax
payment is six times the national average.
In all, adding up the direct and indirect multiplier
effects of growth in the IT sector, it is estimated that
20–25 percent of India’s incremental nominal GDP expan-
sion in 2007–10 must have been derived from this sector.2
The longer-term structural growth story for India looks
stronger and more sustainable thanks to the multiplier
effect of IT, which is now touching on and influencing the
fortunes of every other sector, be it real estate, telecom-
munications, banking, or consumer goods. IT is changing
the face and fate of regions and cities. This is too powerful
a phenomenon to ignore. In many ways, IT industry growth
has set the stage for a new tipping point of consumption-
led growth for India.
IT’s indirect contribution to the Indian economy
The IT sector is also indirectly contributing to the Indian
economy in a number of different fashions, as follows:
• Encouraging balanced regional development:
By gradually spreading their business opera-
tions to smaller Tier II and Tier III cities, the
IT sector—besides generating revenue and
employment—is also assisting in improving the
supply of talent pool and development of physical
and social infrastructures, either directly or by
spurring the government to action.
• Fueling the growth of private equity/venture
capital funding: The growth of the IT sector
kick-started venture capital (VC) activity in India,
which led to the creation of a first generation
of India-centric VC funds. Other sectors—such
as healthcare, manufacturing, and financial
services—have also benefitted from this phe-
nomenon as they too are now able to access this

source of funding. Although ITeS-BPO continues
to be the favorite sector and has the largest share
(28 percent) of private equity (PE) and VC funding,
other sectors now account for a 72 percent share,
compared with 34 percent in 2000. The shift of
focus from physical capital to intellectual capital
and the advent of PE/VC funding has enabled a
large number of first-generation entrepreneurs to
try their hand at starting new enterprises. Their
success is drawing a new wave of entrepreneurs
into the economy.
• Corporate governance: Global exposure has, by
and large, created good corporate governance
practices with the IT companies. This encourages
other industries to follow better governance and
embrace higher standards of disclosure.
• Creating employment opportunities in smaller
towns and cities: Lots of talent gets recruited from
non-metro towns and from rural areas, hitherto a
very underrepresented workforce in the corporate
environment. Today, it is estimated that a third of
the workforce in large IT and ITeS-BPO companies
comes from non-urban or rural areas.
• Growth opportunities for youth: Large numbers of
young people get recruited by the industry every
year. The overall median age group of the sector is
28.9 years, with 70 percent of the workforce being
in the 26- to 35-year age group.
• Promoting women’s empowerment: Beyond pro-
viding women with equal opportunities for growth,
the industry has been very proactive in employing
women. The number of women employed in the
industry is set to rise to 45 percent shortly; this
figure was hovering around 30 percent four to five
years ago.
• Training of workforce: The industry has played a
pioneering and pro-active role in developing the
talent pool in the country by forging links with aca-
demia and the government. It has not restricted its
efforts to developing its own employees alone, but
is also investing in raising the overall education
standards. Besides these educational efforts, the
IT and ITeS-BPO industry is seen as providing a
good work environment and providing a balanced
life for its employees.
Socially relevant products and services
Products and services developed by IT and ITeS-BPO com-
panies have created a positive impact in a number of other
areas, as discussed below:
• Health: Many innovative IT solutions are being
brought into this very critical but underinvested
area. Solutions range from tele-medical consult-
ing in rural areas and assistance in specialized
dimensions such as eye care to providing services
for medical emergencies through a network of
ambulances fitted with advanced life-support
systems. Other areas being addressed by IT solu-
tions include creating awareness about HIV and
AIDS through workshops and conferences, as well
as blood donation drives and creating computer-
based applications.
Using Information and Communication Technologies to Boost India’s Competitiveness
• Education and bridging the digital divide: Exam-
ples in this area include multilingual software,
software for visually impaired users, and textless
user interface applications for illiterate people.
Further examples include creating special tools
to facilitate Web access and setting up training
centers for the disabled and poor, among others.
Different products have also been developed to
provide access to high-quality education and to
support a diverse group of users, ranging from
adults who are being provided with access to
elementary-level education to researchers who
collaborate on multi-disciplinary projects. Many
read-only memory (ROM)-based tutorials and
interactive materials have been developed to
cater to a wide-ranging audience across multiple
industries in many languages.
• Applied knowledge: Mobile application products
have been developed to provide critical informa-
tion related to market prices, weather conditions,
and management information system products.
Access to this information also helps improve
the efficiency and operations of microfinance
institutions.
• Setting up of rural BPOs: BPOs provide training
in speaking English and in computers to rural
youths, thereby creating an educated workforce
that can take advantage of the employment
opportunities offered.
7
Many socially relevant community initiatives are also
supported by IT industry players. These initiatives have an
impact on a wide range of areas, such as health, educa-
tion, rural development, livelihood, women and children—
all of which are highly relevant in light of global efforts to
meet the United Nations’ Millennium Development Goals,
which target eight anti-poverty goals to achieve by 2015.
These include universal primary education, reducing child
mortality, eradicating poverty, and combating diseases
such as HIV/AIDS and malaria.3 The Indian IT industry has
been a pioneer of sorts in pursuing health and sustainabil-
ity initiatives in the domestic market, an effort that has got
to improve substantially in the years to come.
Notes
1 Data for this section are derived from the CLSA Indian Education
Industry Survey, available at http://www.scribd.com/doc/5324806/
CLSA-Indian-Education-Industry-Survey and the National
Association of Software and Services Companies (NASSCOM),
available at http://www.nasscom.in/.
2 See CLSA Indian Education Industry Survey.
3 Information about the United Nations’ Millennium Development
Goals is available at http://www.un.org/millenniumgoals/index.
shtml.
Using Information and Communication Technologies to Boost India’s Competitiveness

Figure 3: Telephone lines per 100 population: India vs. selected comparators, 1995–2009

50.0

37.5 OECD

China

Brazil

Developing Asia
(excluding India)
25.0
India

12.5

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: ITU, 2010.

Figure 4: Personal computers per 100 population: India and selected comparators, 1995–2006
8

50.0

OECD

Brazil

Developing Asia
37.5 (excluding India)

China

India

25.0

12.5

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: ITU, 2010.

telephony penetration has followed an almost opposite
trend from that of mobile penetration. Figure 3 highlights
the very stagnant evolution in fixed tele-density over the
1995–2009 period, with anemic growth from 1995 to
2004 (from 1.26 to 4.15 percent, respectively), followed
by a decline that has continued until the present. As a
consequence, India displayed an extremely low rate of
3.1 percent penetration in 2009, as compared with 41.3
percent in the OECD, 11.3 percent in Developing Asia,
21.4 percent in Brazil, and 23.3 percent in China.
Fixed line penetration remains a bottleneck for
India’s development; removing this holdup would require
important investment in the extension, modernization,
and upgrading of the relevant infrastructure.

Figure 5: Internet users per 100 population: India and selected comparators, 1995–2009
70.0
OECD
Brazil
China
52.5
Developing Asia
(excluding India)
India
35.0
17.5
0
1995 1996 1997 1998 1999 2000
Source: ITU, 2010.
Figure 4 shows the evolution of PC penetration
rates over the 1995–2006 period for India and selected
comparators. Although India’s PC diffusion increased
by around 25 percent in the period under consideration
(rising from 0.1 to 2.7 percent), penetration rates in
2006 remained extremely low compared with the
ones displayed by the OECD countries (53.1 percent),
Brazil (16.1 percent in 2005), and Developing Asia
(7.2 percent). Even China has been more successful
than India in expanding PC penetration, increasing it
from 0.2 percent in 1995 to 5.6 percent in 2006. If one
considers the key role played by PCs in providing the
necessary infrastructure for Internet usage and diffusion
throughout society and in doing business, one can see
the magnitude of the challenge facing the country in
this regard.
Not surprisingly, considering the above trends,
Internet diffusion remains extremely low by international
standards (see Figure 5). Once again Internet penetration
markedly increased between 1995 and 2009 (from 0.03
to 5.1 percent), but it did so starting from a particularly
low base, with the consequence that it continues to be
very poor at present. In 2009, India had 5.1 Internet
users per 100 population; this compares very poorly
with the corresponding OECD, Brazil, and China
figures (69.5, 39.2, and 28.5 percent, respectively). Even
the Developing Asia average, at 19.8 percent, outdoes
India’s performance.
Of course, large increases in Internet penetration
are limited in scope by the underdeveloped fixed
line infrastructure and by the relatively small pool of
PCs present in the country. In particular, the poor
Using Information and Communication Technologies to Boost India’s Competitiveness
2001 2002 2003 2004 2005 2006 2007 2008 2009
infrastructure is an important obstacle considering that
the dial-up connection is still one of the main modalities 9
of Internet access in the country. At the same time, an
interesting development observed in India is mobile
Internet access: according to the Economic Times, over
a fifth of India’s 200 million-plus mobile subscribers
go online via their handsets, although the speed is not
comparable to that of broadband over fixed lines.16
This slower speed should be alleviated by the planned
introduction of 3G services and WiMAX, both of
which will also diminish the cost of mobile broadband
accessibility.
It is clear that market liberalization, FDI opening, and
telecommunications reforms have enabled remarkable
progress in ICT diffusion in India, especially mobile
telephony. However, penetration rates remain low by
international and regional standards, with a marked
disparity between rural and urban areas. Further
investment in infrastructure is a prerequisite for the
country to fully leverage ICT and further close the
digital and economic divide in India.
Table 1 shows graphically the results of an analysis
of India’s performance in the NRI across time, based on
decile rankings.17
This analysis allows us to gauge the degree of
dynamism of a country in leveraging ICT for enhanced
development and competitiveness, and it represents a
useful complement to the snapshot of ICT diffusion
trends in India provided above. Not surprisingly, the
insights from both analyses go in the same direction:
India has showed an upward trend, progressing from the
5th to 4th decile rank over the 2002–09 period, but it has
Using Information and Communication Technologies to Boost India’s Competitiveness
Table 1: Networked Readiness Index 2002–2009 evolution: India and selected comparators
Malaysia China
NRI 2009–2010 rank 28 36
High 1
4
Decile rank
Low 10
Decile ranking
NRI 2009–2010
NRI 2002–2003 or edition of earliest inclusion
failed to match the pace of some relevant comparators.
10 Vietnam has been by far the most dynamic economy
in the NRI evolution, moving from the 9th to the 4th
decile rank, followed by Indonesia (from 8th to 4th decile
rank) and China (from 6th to 3rd decile ranks). Malaysia
and Pakistan both improved by one decile—as did India,
although to different levels (to 3rd and 7th decile rank,
respectively). On a more negative note, Brazil is the only
comparator country that has dropped one decile rank
over the period under consideration, losing some ground
in networked readiness.
Gauging India’s networked readiness in an international
context: Findings from the NRI 2009–2010
After having analyzed the main recent trends in ICT
diffusion and networked readiness in India, this section
will provide an in-depth assessment of the country’s
capacity and potential to leverage ICT for increased
development and competitiveness, drawing on the find-
ings of the latest NRI computation, featured in The Global
Information Technology Report 2009–2010. Comparisons
with a number of neighboring and/or otherwise relevant
countries and regions,18 as well as India’s inter-temporal
comparisons for the NRI time series, will be included
in the analysis to set the country’s progress and the chal-
lenges it faces into a more nuanced context.
Table 2 displays the NRI 2009–2010 rankings
(and identifies them also by income group) to set the
global networked readiness scene.19 Figure 6 provides a
snapshot of India’s performance in networked readiness
in 2002 and 2009 by pillar, while Tables 3 through
6 compare India’s rankings and scores with those of
selected comparators in the NRI 2009–2010 and each
India Vietnam Brazil Indonesia Pakistan
43 53 55 66 89
composing subindex and pillar. Further information on
India’s performance at the variable level can be found
in Appendix 2: India’s Networked Readiness Profile,
which includes comparisons with China and the United
States as well as Developing Asia and OECD averages.
Last but not least, the networked readiness “heatmap” in
Table 7 offers a useful graphic representation of where
India stands with respect to selected comparators in each
NRI component in terms of the differences in score and
rank. Blue- or gray-shaded cells indicate that India fares
better or worse, respectively, than the specific comparator.
The darker the shading, the greater the difference in
performance. No shading, in turn, signals that there is no
significant difference with the comparator.
India is ranked 43rd out of 133 economies in
the NRI 2009–2010, with an impressive 11-place
improvement since 2008. It was also third in its income
(lower-middle) group, coming after China and Tunisia,
with a higher score than the income group average
(4.09 vs. 3.41). Within the comparator group (Table 3),
it lagged behind the United States (5th), Malaysia (27th),
and the OECD average (4.75) and clustered with China
(37th), while outperforming the remaining countries
(notably fellow BRIC Brazil and neighboring Pakistan,
ranked 61st and 87th, respectively) and the Developing
Asia average (3.62).
The heatmap’s assessment of India’s comparative
performance (Table 7) complements and corroborates
these general findings, providing a more granular
analysis at the subindex and pillar level. Overall, India is
surpassed in rank in most pillars by the United States and
Malaysia, with some notable exceptions such as individual
readiness, where the country’s remarkable showing of 7th
 Using Information and Communication Technologies to Boost India’s Competitiveness
Table 2: The Networked Readiness Index 2009–2010 and 2008–2009

NRI 2009–2010 NRI 2008–2009 NRI 2009–2010 NRI 2008–2009

Rank within Rank within

Country/Economy Rank Score income group* Rank Score Country/Economy Rank Score income group* Rank Score

Sweden 1 5.65 HI 1 2 5.84 Bulgaria 71 3.66 UM 18 68 3.80

Singapore 2 5.64 HI 2 4 5.67 Macedonia, FYR 73 3.64 UM 19 79 3.67
Denmark 3 5.54 HI 3 1 5.85 Dominican Republic 74 3.64 UM 20 75 3.76
Switzerland 4 5.48 HI 4 5 5.58 Senegal 75 3.63 LO 2 80 3.67
United States 5 5.46 HI 5 3 5.68 Kuwait 76 3.62 HI 45 57 3.98
Finland 6 5.44 HI 6 6 5.53 Gambia, The 77 3.61 LO 3 91 3.44
Canada 7 5.36 HI 7 10 5.41 Mexico 78 3.61 UM 21 67 3.84
Hong Kong SAR 8 5.33 HI 8 12 5.30 Trinidad and Tobago 79 3.60 HI 46 81 3.67
Netherlands 9 5.32 HI 9 9 5.48 Russian Federation 80 3.58 UM 22 74 3.77
Norway 10 5.22 HI 10 8 5.49 El Salvador 81 3.55 LM 10 78 3.69
Taiwan, China 11 5.20 HI 11 13 5.30 Ukraine 82 3.53 LM 11 62 3.88
Iceland 12 5.20 HI 12 7 5.50 Guatemala 83 3.53 LM 12 82 3.64
United Kingdom 13 5.17 HI 13 15 5.27 Serbia 84 3.51 UM 23 84 3.62
Germany 14 5.16 HI 14 20 5.17 Philippines 85 3.51 LM 13 85 3.60
Korea, Rep. 15 5.14 HI 15 11 5.37 Botswana 86 3.47 UM 24 77 3.72
Australia 16 5.06 HI 16 14 5.29 Pakistan 87 3.44 LM 14 98 3.31
Luxembourg 17 5.02 HI 17 21 5.10 Morocco 88 3.43 LM 15 86 3.59
France 18 4.99 HI 18 19 5.17 Namibia 89 3.40 UM 25 92 3.44
New Zealand 19 4.94 HI 19 22 5.04 Kenya 90 3.40 LO 4 97 3.35
Austria 20 4.94 HI 20 16 5.22 Argentina 91 3.38 UM 26 87 3.58
Japan 21 4.89 HI 21 17 5.19 Peru 92 3.38 UM 27 89 3.47
Belgium 22 4.86 HI 22 24 5.02 Georgia 93 3.38 LM 16 88 3.48
United Arab Emirates 23 4.85 HI 23 27 4.76 Mongolia 94 3.36 LM 17 93 3.43
Ireland 24 4.82 HI 24 23 5.03 Albania 95 3.27 LM 18 105 3.23
Estonia 25 4.81 HI 25 18 5.19 Mali 96 3.27 LO 5 107 3.18
Malta 26 4.75 HI 26 26 4.79 Zambia 97 3.26 LO 6 102 3.26
Malaysia 27 4.65 UM 1 28 4.76 Ghana 98 3.25 LO 7 103 3.25
Israel 28 4.58 HI 27 25 4.98 Nigeria 99 3.25 LM 19 90 3.45
Bahrain 29 4.58 HI 28 37 4.38 Guyana 100 3.22 LM 20 100 3.29 11
Qatar 30 4.53 HI 29 29 4.68 Armenia 101 3.20 LM 21 114 3.06
Slovenia 31 4.51 HI 30 31 4.57 Mauritania 102 3.19 LO 8 109 3.12
Cyprus 32 4.48 HI 31 33 4.52 Libya 103 3.16 UM 28 101 3.28
Portugal 33 4.41 HI 32 30 4.63 Côte d’Ivoire 104 3.16 LM 22 111 3.12
Spain 34 4.37 HI 33 34 4.50 Syria 105 3.13 LM 23 94 3.41
Barbados 35 4.36 HI 34 36 4.38 Honduras 106 3.13 LM 24 95 3.41
Czech Republic 36 4.35 HI 35 32 4.53 Lesotho 107 3.12 LM 25 118 3.02
China 37 4.31 LM 1 46 4.15 Burkina Faso 108 3.10 LO 9 113 3.07
Saudi Arabia 38 4.30 HI 36 40 4.28 Tajikistan 109 3.09 LO 10 104 3.25
Tunisia 39 4.22 LM 2 38 4.34 Bosnia and Herzegovina 110 3.07 UM 29 106 3.23
Chile 40 4.13 UM 2 39 4.32 Benin 111 3.06 LO 11 121 2.96
Lithuania 41 4.12 UM 3 35 4.40 Venezuela 112 3.06 UM 30 96 3.39
Montenegro 42 4.10 UM 4 71 3.79 Algeria 113 3.05 UM 31 108 3.14
India 43 4.09 LM 3 54 4.03 Ecuador 114 3.04 LM 26 116 3.03
Jordan 44 4.09 LM 4 44 4.19 Uganda 115 3.03 LO 12 120 2.98
Puerto Rico 45 4.07 HI 37 42 4.23 Mozambique 116 3.03 LO 13 124 2.91
Hungary 46 3.98 HI 38 41 4.28 Cambodia 117 3.03 LO 14 126 2.89
Thailand 47 3.97 LM 5 47 4.14 Bangladesh 118 3.01 LO 15 130 2.70
Italy 48 3.97 HI 39 45 4.16 Malawi 119 3.01 LO 16 110 3.12
Costa Rica 49 3.95 UM 5 56 3.99 Tanzania 120 3.01 LO 17 119 3.01
Oman 50 3.91 HI 40 50 4.08 Madagascar 121 3.00 LO 18 112 3.09
Croatia 51 3.91 HI 41 49 4.09 Ethiopia 122 2.98 LO 19 129 2.80
Latvia 52 3.90 UM 6 48 4.10 Kyrgyz Republic 123 2.97 LO 20 115 3.04
Mauritius 53 3.89 UM 7 51 4.07 Nepal 124 2.95 LO 21 127 2.85
Vietnam 54 3.87 LO 1 70 3.79 Nicaragua 125 2.95 LM 27 125 2.90
Slovak Republic 55 3.86 HI 42 43 4.19 Suriname 126 2.92 UM 32 117 3.03
Greece 56 3.82 HI 43 55 4.00 Paraguay 127 2.88 LM 28 122 2.93
Uruguay 57 3.81 UM 8 65 3.85 Cameroon 128 2.86 LM 29 123 2.93
Panama 58 3.81 UM 9 66 3.84 Burundi 129 2.80 LO 22 131 2.63
Romania 59 3.80 UM 10 58 3.97 Timor-Leste 130 2.69 LM 30 133 2.47
Colombia 60 3.80 UM 11 64 3.87 Bolivia 131 2.68 LM 31 128 2.82
Brazil 61 3.80 UM 12 59 3.94 Zimbabwe 132 2.67 LO 23 132 2.49
South Africa 62 3.78 UM 13 52 4.07 Chad 133 2.57 LO 24 134 2.44
Brunei Darussalam 63 3.77 HI 44 63 3.87
Source: World Economic Forum, 2010.
Azerbaijan 64 3.75 LM 6 60 3.93
Poland 65 3.74 UM 14 69 3.80 * Income groups: HI = high income; UM = upper-middle income; LM =
Jamaica 66 3.73 UM 15 53 4.03 lower-middle income; LO = lower income.
Indonesia 67 3.72 LM 7 83 3.62 Notes: The highest-ranked economy of each income group appears in
Kazakhstan 68 3.68 UM 16 73 3.79 bold typeface.
Turkey 69 3.68 UM 17 61 3.91 Country classification by income group is from the World Bank (situation
Egypt 70 3.67 LM 8 76 3.76 as of December 2009).
Using Information and Communication Technologies to Boost India’s Competitiveness

Figure 6: India’s networked readiness in 2002 and 2009

Rank
Edition 2009–2010 2002–2003
current 2002–2003
sample sample
Countries 133 81* 82

Networked Readiness Index 43 35 37 2009–2010

1st pillar: Market environment 35 29 28 2002–2003

2nd pillar: Political and regulatory environment 46 37 16

3rd pillar: Infrastructure environment 83 62 70
4th pillar: Individual readiness 7 6 70
5th pillar: Business readiness 23 22 27
6th pillar: Government readiness 35 24 33
7th pillar: Individual usage 109 78 79
8th pillar: Business usage 26 25 42
9th pillar: Government usage 48 40 25

1 2 3 4 5 6 7
NRI score (1–7 scale)
*Haiti is no longer covered in the GITR 2009–2010.

Table 3: Networked Readiness Index 2009–2010 and composing subindexes: India and selected comparators

Overall NRI 2009–2010 Environment subindex Readiness subindex Usage subindex

Country/Region Rank Score Rank Score Rank Score Rank Score

12
United States 5 5.46 10 5.41 7 5.29 2 5.69
Malaysia 27 4.65 37 4.37 11 5.19 28 4.39
China 37 4.31 57 3.85 19 5.10 36 3.99
India 43 4.09 53 3.96 22 5.07 64 3.25
Vietnam 54 3.87 69 3.72 37 4.70 67 3.17
Brazil 61 3.80 74 3.67 62 4.19 47 3.53
Indonesia 67 3.72 66 3.74 43 4.53 86 2.90
Pakistan 87 3.44 98 3.32 59 4.30 94 2.71
OECD average 4.75 4.85 4.79 4.60
Developing Asia average 3.62 3.52 4.33 3.01
Lower-middle-income average 3.41 3.41 4.00 2.83

Source: World Economic Forum, 2010.

Table 4: Environment: India and selected comparators

2. Political and regulatory 3. Infrastructure

Environment 1. Market environment environment environment

Country/Region Rank Score Rank Score Rank Score Rank Score

United States 10 5.41 9 5.32 19 5.40 5 5.51

Malaysia 37 4.37 32 4.78 25 5.04 51 3.29
India 53 3.96 35 4.67 46 4.52 83 2.70
China 57 3.85 72 4.13 47 4.52 70 2.89
Indonesia 66 3.74 40 4.57 60 4.17 100 2.48
Vietnam 69 3.72 85 3.98 48 4.46 80 2.72
Brazil 74 3.67 87 3.97 73 3.99 63 3.05
Pakistan 98 3.32 68 4.17 97 3.61 115 2.19
OECD average 4.85 4.85 5.15 4.55
Developing Asia average 3.52 4.11 3.91 2.54
Lower-middle-income average 3.41 3.97 3.69 2.57

Source: World Economic Forum, 2010.

 Using Information and Communication Technologies to Boost India’s Competitiveness
Table 5: Readiness: India and selected comparators

Readiness 4. Individual readiness 5. Business readiness 6. Government readiness

Country/Region Rank Score Rank Score Rank Score Rank Score

United States 7 5.29 19 5.32 8 5.45 13 5.10

Malaysia 11 5.19 11 5.48 26 4.91 11 5.19
China 19 5.10 9 5.50 34 4.72 14 5.09
India 22 5.07 7 5.69 23 4.93 35 4.58
Vietnam 37 4.70 43 4.93 52 4.33 24 4.85
Indonesia 43 4.53 23 5.26 65 4.18 64 4.14
Pakistan 59 4.30 39 4.99 70 4.08 90 3.82
Brazil 62 4.19 99 3.89 38 4.60 68 4.09
OECD average 4.79 4.88 4.99 4.51
Developing Asia average 4.33 4.77 4.03 4.18
Lower-middle-income average 4.00 4.32 3.82 3.85

Source: World Economic Forum, 2010.

Table 6: Usage: India and selected comparators

Usage 7. Individual usage 8. Business usage 9. Government usage

Country/Region Rank Score Rank Score Rank Score Rank Score

United States 2 5.69 16 5.28 1 6.10 4 5.69

Malaysia 28 4.39 46 3.65 22 4.34 12 5.18
China 36 3.99 71 2.79 16 4.73 30 4.45
Brazil 47 3.53 61 2.97 37 3.62 45 4.00
India 64 3.25 109 1.83 26 3.97 48 3.95 13
Vietnam 67 3.17 75 2.70 46 3.25 68 3.56
Indonesia 86 2.90 92 2.17 47 3.21 86 3.31
Pakistan 94 2.71 102 2.00 80 2.83 91 3.29
OECD average 4.60 4.89 4.34 4.58
Developing Asia average 3.01 2.24 3.27 3.52
Lower-middle-income average 2.83 2.22 2.89 3.37

Source: World Economic Forum, 2010.

place is 12 and 4 positions, respectively, ahead of those
two countries. The comparison with China is more
mixed, with large variations in only a handful of pillars,
notably market environment in terms of positive areas
(+37 vis-à-vis China), and individual usage (–38) as well
as government readiness (–21) in terms of negative areas.
Finally, India largely outshines the remaining
comparators (e.g.,Vietnam, Brazil, Indonesia, and
Pakistan) in most pillars, with the exception of the
infrastructure environment (where it is ranked 20 places
lower than Brazil) and individual usage (where it is
ranked 34, 48, and 17 places lower than Vietnam, Brazil,
and Indonesia, respectively). Similar, although more
nuanced, conclusions can be drawn from the heatmap’s
comparisons by score (see Table 7b).20
The information displayed in Figure 6 and Table
3 highlights a mixed networked readiness showing
for India. The country’s high level of readiness (22nd)
does not seem to have translated into similarly high
levels of usage (64th), while the national environment
(53rd) appears not to be sufficiently conducive for
the development of new technologies. Particularly
worrisome areas are the low individual usage (109th) and
the poor infrastructure environment (83rd) as well as,
to a lesser extent, inadequate government usage of ICT
(48th) and a political and regulatory environment (46th)
that is not fully conducive to innovation. The extremely
low degree of ICT penetration at the individual level and
poor infrastructure are weaknesses related to the sheer
size of the Indian market and the country’s very unequal
income distribution. India shares these shortcomings
with the other large emerging markets included in the
comparator sample. Infrastructure and individual usage
are a particular challenge for Pakistan (115th and 102nd,
respectively), Indonesia (100th and 92nd), and Vietnam
(80th and 75th), but also, to a lesser extent, for fellow
BRIC China (70th and 71st, respectively) and Brazil
(63rd and 61st).
Using Information and Communication Technologies to Boost India’s Competitiveness

Table 7: Networked readiness heatmap for India

7a: Difference in ranks Rank difference

>1 > 0.5 > 0.1 > –0.1 > –0.5 > –1
India ranks higher Comparator ranks higher
Networked Readiness Index 2009–2010

2. Political and regulatory environment

3. Infrastructure environment
I. Environment component

6. Government readiness
II. Readiness component

1. Market environment

4. Individual readiness

5. Business readiness
III. Usage component

9. Government usage
7. Individual usage

8. Business usage
Rank

India 43 53 22 64 35 46 83 7 23 35 109 26 48
Score difference
with
United States –38 –43 –15 –62 –26 –27 –78 12 –15 –22 –93 –25 –44
Malaysia –16 –16 –11 –36 –3 –21 –32 4 3 –24 –63 –4 –36
China –6 4 –3 –28 37 1 –13 2 11 –21 –38 –10 –18
Vietnam 11 16 15 3 50 2 –3 36 29 –11 –34 20 20
Brazil 18 21 40 –17 52 27 –20 92 15 33 –48 11 –3
Indonesia 24 13 21 22 5 14 17 16 42 29 –17 21 38
Pakistan 44 45 37 30 33 51 32 32 47 55 –7 54 43
14 World Economic Forum, 2010.

7b: Difference in scores

Score difference
> 20 > 10 >5 > –5 > –10 > –20
India scores higher Comparator scores higher
Networked Readiness Index 2009–2010

2. Political and regulatory environment

3. Infrastructure environment
I. Environment component

6. Government readiness
II. Readiness component

1. Market environment

4. Individual readiness

5. Business readiness
III. Usage component

9. Government usage
7. Individual usage

8. Business usage

Score

India 4.09 3.96 5.07 3.25 4.67 4.52 2.70 5.69 4.93 4.58 1.83 3.97 3.95
Rank difference
with
United States –1.37 –1.44 –0.22 –2.44 –0.65 –0.88 –2.81 0.37 –0.52 –0.52 –3.45 –2.13 –1.74
OECD* –0.65 –0.89 0.27 –1.35 –0.18 –0.63 –1.85 0.81 –0.06 0.07 –3.06 –0.36 –0.63
Malaysia –0.56 –0.41 –0.13 –1.14 –0.11 –0.52 –0.59 0.21 0.02 –0.61 –1.82 –0.36 –1.23
China –0.22 0.12 –0.04 –0.74 0.54 0.00 –0.19 0.19 0.21 –0.51 –0.96 –0.75 –0.50
Vietnam 0.23 0.24 0.36 0.08 0.69 0.06 –0.02 0.77 0.59 –0.27 –0.87 0.72 0.39
Brazil 0.29 0.29 0.87 –0.28 0.70 0.53 –0.35 1.80 0.32 0.49 –1.14 0.35 –0.06
Indonesia 0.37 0.22 0.54 0.35 0.10 0.35 0.22 0.43 0.74 0.44 –0.34 0.76
Developing Asia* 0.47 0.44 0.74 0.24 0.56 0.61 0.16 0.92 0.89 0.40 –0.41 0.71 0.43
Pakistan 0.65 0.64 0.77 0.54 0.50 0.91 0.51 0.70 0.84 0.76 –0.17 1.14 0.66
World Economic Forum, 2010.
* Average.

In terms of the three main national stakeholders’
contributions to furthering India’s networked readiness,
the business sector appears to be leading the way (23rd
and 26th for business readiness and usage, respectively).
As mentioned above, the individuals’ remarkable
preparation and propensity to use new technologies
(7th for individual readiness) contrasts sharply with their
low usage (109th), one of the worst in the comparator
sample. Finally, the government appears to have a
rather developed vision for ICT (35th for government
readiness) but additional effort needs to be made on its
implementation (48th for government usage).
A closer look at Figure 6 and at the changes between
2002 and 2009 highlights some interesting trends. In
a constant 2002 sample of 81 economies, India has
improved two places in the period under consideration.
Especially notable strides have been made in individual
readiness (from 70th to 6th in a constant sample),
business usage (from 42nd to 25th), and, to a lesser extent,
the infrastructure environment (from 70th to 62nd) and
business readiness (from 33rd to 24th).
On a more negative note, the country seems to have
lost some ground in government usage (dropping from
25th to 40th place) and the quality of its regulatory
environment (from 16th to 37th).
Interestingly enough, although the country has
experienced a stellar increase in ICT penetration in
absolute terms as discussed in the section above, its
relative performance in individual usage has not changed
much—just a single position up from 2002 in a constant
sample (from 79th to 78th).
The rest of this section will be devoted to an analysis
of India’s performance in the three subindexes and
nine pillars composing the NRI, identifying the main
competitive strengths and shortcomings in each area.
Comparisons will be drawn primarily with the countries
included in the comparator sample; additional country
comparisons with the full 133-country sample will also
be made when relevant.
Environment subindex
As explained above, an innovation-friendly environment
is a crucial prerequisite for a country to be able to benefit
fully from ICT advances and to develop new technolo-
gies. Characteristics of such an environment include:
a market environment with little red tape, widespread
availability of financing for companies (especially venture
capital) and latest technologies as well as well-developed
clusters; a predictable and fair regulatory framework that
notably ensures property rights protection and sufficient
competition in the ICT sector; and extensive ICT hard
infrastructure complemented by a large pool of quali-
fied human resources (notably scientists and engineers)
and top-notch research capabilities. The environment
subindex measures the extent to which the market, regu-
latory, and infrastructure environments of a given country
are conducive to innovation and ICT development.
Using Information and Communication Technologies to Boost India’s Competitiveness
It includes a total of 30 variables grouped into three
different pillars, relating to the market, regulatory, and
hard and soft infrastructure dimensions.
India is ranked 53rd for the quality of its
environment for ICT, with a 43-place gap compared
with best sample performer, the United States; it
is a fairly similar showing to that of China (57th).
It outperforms most countries and regions in the
comparator sample, including Indonesia (66th), Brazil
(74th), and the Developing Asia and lower-middle-
income averages. India’s performance appears fairly
diverse in the three dimensions covered by the subindex.
While the market environment is assessed as being rather
ICT friendly at 35th, the regulatory framework is less
so at 46th, and infrastructure stands out as particularly
problematic at 83rd.
Market environment
The market environment pillar assesses different dimen-
sions of national business climates that facilitate the
development and diffusion of new technologies, by taking
into account 11 indicators, as per Figure 7.
With a rank of 35th, the market environment
represents an area of relative strength for India. The
country’s showing is fairly close to that of the two sample
best performers, the United States (9th) and Malaysia
15
(32nd), and outshines the rest of the sample, including the
OECD average (4.87 vs. 4.85). It is interesting to note
that India fares much better in this dimension than the
other two fellow BRIC economies, China (72nd) and
Brazil (87th).
India’s robust showing in this pillar rests on its
sophisticated financial markets (32nd), its provision of
adequate venture capital to startups (23rd), its well-
developed clusters (20th) and intense competition (12th),
the availability of the latest technologies (39th), and the
freedom to exchange information (18th for freedom of
the press). In particular, important ICT clusters have been
developed in India in parallel with the adoption of public
policies and strategies to foster the IT sector.
To this end, the government implemented policies to
develop software exports, beginning in the late 1960s.21
Focus on the sector was increased in the late 1980s
with the World Market Policy and the establishment of
the STPI scheme, and again in the late 1990s, with the
establishment of the Ministry of Information Technology,
among other actions.22
In turn, FDI has been seen and leveraged by the
government as a key source of the latest knowledge and
technology. Indeed, foreign participation is encouraged
in most economic sectors. Among the beneficiaries of
this approach are the firms in the ITeS-BPO sector—
these firms have prospered in a context of minimal
regulations and restrictions along with fiscal and
regulatory incentives. India has not been as successful
an FDI destination as China, however, attracting in
2009 only one-third the FDI that China attracted
Using Information and Communication Technologies to Boost India’s Competitiveness

Figure 7: Market environment in India

Venture capital
availability: 23

Financial market
Freedom of the press: 18
sophistication: 32

Intensity of local Availability of latest

competition: 12 technologies: 39
35


Market
4HYRL[
No. of procedures State of cluster
to start a business*: 115 environment
,U]PYVUTLU[ development: 20

Time required to Burden of government

start a business*: 88 regulations: 95

Extent and effect

Total tax rate*: 116
of taxation: 29
*Quantitative data

Source: World Economic Forum, 2010.

Figure 8: FDI inward flows (millions of US dollars at current prices and current exchange rates), 2009

16

Malaysia 1,381

Pakistan 2,387

Vietnam 4,500

Indonesia 4,877

Brazil 25,949

India 34,613

China 95,000

United States 129,883

0 30,000 60,000 90,000 120,000 150,000

Source: UNCTADstat.

(see Figure 8). Further efforts are needed to upgrade
the country’s infrastructure and firms’ manufacturing
capabilities as well as to leverage technology spillovers.
On a less positive note, red tape remains a problem
for India. The severity of this hurdle is confirmed by
the perception of the business executives surveyed in
2009 and 2010, which placed corruption and inefficient
government bureaucracy among the most problematic
factors for doing business in the country, together with an
inadequate infrastructure supply (see Figure 9).
The total tax rate of 64.7 percent of total commercial
profits (116th) is very high by international standards.23
Only China among the comparators ranks lower, with a
rate approaching 80 percent. Similarly, the lengthy time
(30 days) and large number of procedures (13) to start
a business—ranked 88th and 115th, respectively—make
 Using Information and Communication Technologies to Boost India’s Competitiveness
Figure 9: Most problematic factors for doing business in India, 2010

Inadequate supply of infrastructure 18.50

Corruption 17.29
Inefficient government bureaucracy 14.41
Restrictive labor regulations 9.52

Access to financing 6.50

Tax regulations 6.03

Policy instability 5.56

Inadequately educated workforce 4.62

Inflation 4.42

Tax rates 3.49

Poor work ethic in national labor force 2.82

Government instability/coups 2.61

Crime and theft 1.61

Poor public health 1.41
Foreign currency regulations 1.21

0 5 10 15 20

Source: World Economic Forum, Executive Opinion Survey, 2010.

Figure 10: Political and regulatory environment in India

17

Effectiveness of
Level of competition index*: 1
law-making bodies: 24

Time to enforce
a contract*: 126 Laws relating to ICT: 39

46


Political
4HYRL[and
No. of procedures to
enforce a contract*: 117 regulatory
,U]PYVUTLU[ Judicial independence: 37
environment

Intellectual property
Property rights: 54
protection: 61

Efficiency legal framework in Efficiency legal framework

challenging regulations: 21 for disputes: 37
*Quantitative data

Source: World Economic Forum, 2010.

setting up an enterprise a complicated, time-consuming,
and costly venture. While ICT and e-government services
can surely help in reducing bureaucracy and make
processes more agile, such rigidities need to be addressed
by a concomitant liberalization of entry and exit policies.
Political and regulatory environment
The political and regulatory environment pillar gauges
the extent to which the legal framework in a given
economy is conducive to ICT. Figure 10 displays the 10
criteria assessed with India’s rankings.
India ranks 46th for the quality of its political and
regulatory environment, third in the comparator sample
after the United States (19th) and Malaysia (25th) and
clustering with China (47th) and Vietnam (48th). It also
largely outperforms Brazil (73rd) and Pakistan (97th) as
well as the Developing Asia and lower-middle-income
averages (4.52 vs. 3.91 and 3.69, respectively).
Using Information and Communication Technologies to Boost India’s Competitiveness

Table 8: Laws relating to ICT: India and selected Malaysia (26th) in the comparator sample but much
comparators, 2008–2009 weighted average* better than fellow BRIC country China (48th), for
instance (see Table 8). India introduced a comprehensive
Country/Economy Rank Score Information Technology Act in 2000, providing
Singapore 1 5.96 for—among other things—the legal recognition of
Denmark 2 5.84 electronic documents and digital signatures, a justice
Estonia 3 5.79 administration system for cyber crimes, and the
Sweden 4 5.76 protection of copyright.25
Austria 5 5.62
Norway 6 5.62
Infrastructure environment
Korea, Rep. 7 5.60
The infrastructure environment pillar, with its nine
Australia 8 5.56
United States 9 5.54
indicators (Figure 11), considers accessibility as well as
United Arab Emirates 10 5.52
the presence and quality of different elements of the
New Zealand 11 5.50 infrastructure that pertain to ICT.
Canada 12 5.50 India, at 83rd, posts in this pillar its second-worst
Hong Kong SAR 13 5.47 showing across the nine pillars, with a huge 78-place
Iceland 14 5.41 gap with respect to best-ranked comparator United
Finland 15 5.41 States (5th). Although the country with a score of 2.70
Luxembourg 16 5.38 does better than the regional and income group averages
Switzerland 17 5.37 (2.54 and 2.57, respectively), it is surpassed by most of
Germany 18 5.34 the sample with the exception of Vietnam (100th) and
France 19 5.32 Pakistan (115th).
United Kingdom 20 5.29 The quality of hard infrastructure especially appears
Malaysia 26 5.14 to be a problem, although to varying extents, for all the
India 39 4.54 large emerging markets included in the comparator
Brazil 41 4.43 sample. This is because of the formidable challenges
18 China 48 4.24
involved in connecting and reaching all parts of their
Indonesia 65 3.95
vast territories.
Vietnam 70 3.80
As confirmed by the CEOs’ perceptions captured in
Pakistan 95 3.27
Figure 9, the dismal state of infrastructure is one of the
* How would you assess your country’s laws relating to the use
of information and communication technologies (e.g., electronic
major hurdles in India’s business climate: the inadequate
commerce, digital signatures, consumer protection)? (1 = nonexistent; supply of infrastructure has consistently come first as
7 = well developed)
the most problematic factor for doing business in the
Source: World Economic Forum, Executive Opinion Survey 2008, 2009.
Note: Blue indicates comparators discussed in the text; black indicates
country in the Executive Opinion Survey since 2003.
the top 20 economies in this variable, other than the comparators. The World Economic Forum’s Global Competitiveness
Index 2010–2011 ranked India 86th for the quality
of its infrastructure networks, highlighting electricity
Among the strengths in the country’s regulatory supply and production, along with transport, as
environment, one can cite its extensive competition for particularly lacking. Such shortcomings undermine
Internet services, international long distance services, and business activities and productivity improvements, deter
mobile telephone services (1st); its effective law-making foreign investors, and are seen as key bottlenecks for
bodies (24th); and an efficient legal framework to challenge manufacturing development. Many factors are at the
regulations (21st) as well as a fairly independent judiciary root of this situation, including insufficient investment
(37th). In particular, India has been quite successful in (a situation in turn attributable to poor planning, lack
liberalizing its telecommunications markets, which were of coordination, excessive bureaucracy, price controls,
controlled until the 1990s by inefficient state-owned and cross-subsidy mechanisms, among others) and the
monopolies. Acknowledging the important link between recent pace of economic growth. The rapid urbanization
telecommunications services and economic growth, the process India is currently undergoing, by which it is
National Telecom Policy (NTP) 1994, which allowed estimated that 41 percent of population will be living
competition in mobile and fixed services, and especially in urban areas by 2030 (up from 28 percent today),
the NTP 1999 introduced full competition in mobile will put additional strain on sanitation, electricity, and
services, fixed services, and national long distance.24 transport infrastructure going forward.26 Infrastructure
The development of national laws relating to the in major cities (and ICT clusters) such as Bangalore,
use of ICT (including electronic commerce, digital Mumbai, Delhi, and Pune has reached a saturation
signatures, and consumer protection) is assessed as fairly point, while emerging cities such as Mysore, Maglore,
satisfactory (39th), after the United States (9th) and and Nagpur urgently need the development of modern
transport and utilities infrastructure. The OECD has

Figure 11: Infrastructure environment in India
No. of telephone lines*: 106
Internet bandwith*: 107
Accessibility of
digital content: 84
Education expenditure*: 94
Tertiary education
enrollment*: 100
*Quantitative data
Source: World Economic Forum, 2010.
estimated that India needs to increase its investment
in infrastructure from the current 4–5 percent to 8–9
percent of GDP to ensure sufficient infrastructure
upgrading and extension.27
With respect to telecommunications infrastructure,
there are large regional disparities with huge gaps
between urban and rural connectivity (see Box 3,
authored by Ashish Babu and Sobha Varghese of Tata
Consultancy Services, for an analysis of the challenges
bridging the digital divide between rural and urban
India). Reforms are also needed to ensure that firms
have access to additional bandwidth spectrum to
expand their wireless services and the delivery of data
services (at the moment controlled by the Ministry
of Defense), therefore promoting FDI into the
telecommunications sector.
The NRI assessment confirms India’s inadequacies
when it comes to hard infrastructure for ICT: the
country had only 3.2 telephone lines per 100 population
in 2008, a far cry not only from the 42.6 global best
performer Switzerland boasted in 2008 but also from
China (25.5 lines) and the regional average (10.7 lines).
In the same year, there were 1.3 secure Internet servers
per 100 population, lower than the regional average (6.3)
and around 400 times less than the global number 1 in
this indicator, Iceland (at 530.6). Internet bandwidth
was 0.3 Mb/s per 10,000 population, compared with
4.8 in China, 4.5 in Developing Asia, and 74,142.2 in
top-ranked Luxembourg. Likewise, India’s electricity
production per capita in 2006 was among the lowest
in the world (103rd) at 645.9 kilowatt hours, vis-à-vis
2,179.0 for China and 9,245.1 for Iceland. Electricity
Using Information and Communication Technologies to Boost India’s Competitiveness
Secure Internet servers*: 98
Electricity production*: 103
83

Infastructure
4HYRL[
Availability of scientists
environment
,U]PYVUTLU[ and engineers: 4
Quality of scientific
research institutions: 25
is perhaps the greatest infrastructure challenge for the
country: in 2007, demand exceeded supply by around 19
15 percent. Moreover, electricity production per unit
of GDP, after increasing continuously until 2000, has
reversed its trend: the ratio is now close to 1 kilowatt
hour per unit of GDP. For China, the situation is almost
the reverse and appears much more favorable. Besides
the under-production mentioned above, 25 percent of
energy production was lost in 2006 before reaching
its destination, with an important impact on the ICT
sector’s profitability and on the development of the
energy-intensive manufacturing sector.28
The data presented above show the extent of the
challenge that India faces to catch up not only with
international best practices but even with regional
standards.
The situation looks rosier in terms of softer
infrastructure. India can rely on one of the largest pools
of scientists and engineers in the world (with a score
of 5.62, ranked 4th), on a par with the United States
and much higher than the OECD average (4.88), not
to mention China (4.61, 36th) and the regional average
(4.05) (see Table 9). Indeed, the Indian educational system
places much emphasis on science, math, and engineering,
thus creating the right environment to train and produce
IT professionals. According to the OECD, India has
the largest pool of suitable offshore talent, representing
28 percent of the total suitable pool available across all
offshore destinations.29
Also considering India’s very favorable demographic
trends, by which its population will stay largely
concentrated in the 20- to 45-year-old age groups for the
Using Information and Communication Technologies to Boost India’s Competitiveness
Box 3: Bridging the digital divide: Bringing the urban and rural population closer through information and
communication technologies
ASHISH BABU and SOBHA VARGHESE, Tata Consultancy Services
The International Monetary Fund (IMF) recently revised
its forecast of India’s economic growth from 9.4 percent to
9.7 percent, citing robust industrial output and strong macro-
economic indicators. Despite fast growth, a world-class IT
sector, a competitive automotive industry, and a burgeoning
middle class, India remains a country of contrasts. About
70 percent of India’s 1.2 million people live in villages with
low income levels, poor quality of life, and inadequate
development levels. In contrast, the other 30 percent of the
population of India, who live in urban areas, have access to
better infrastructure as well as health and educational facili-
ties; these people contribute a majority of the country’s GDP.
The urban-rural disparity is even more evident in the
case of income generation. Although the Indian economy
has surged in the last 15 years, this growth has not trickled
down to the countryside, where per capita income has
remained relatively stagnant. Furthermore, experts argue
that in the next 20 years, 70 percent of India’s jobs will be
created in the cities, which will increase the urban contri-
bution to the country’s GDP from the current 58 percent to
about 70 percent.
The urban-rural divide is also highly visible when
comparing access to technology such as the Internet and
20
telephony. Eighty-nine percent of rural households in India
do not have a phone and only 7 percent of India’s population
(or 84 million people) are connected through Internet and
telephony in India. This is a very low number considering
the large population base, prompting India to be known
as “Asia’s digital sleeper.” The US report Falling through
the Net recognized this digital divide, or information gap,
between the rural and urban populations and established
that those with low incomes, in rural areas and without
education, were the ones to have least access to informa-
tion and communication technologies (ICT).1 This corollary
continues to hold true for India.
Information and communication technologies: The potential
to create rural change
It has long been recognized that technology, especially ICT,
has the potential to break barriers that poverty creates.
Rural India has already been transformed, in the 1990s, by
the easy availability of public phones and satellite televi-
sion. The next revolution is expected to come in the form of
the Internet and its applications for rural development; this
change is expected to bring about rural empowerment and
improve living standards.
Many pilot projects have already been carried out
successfully to evaluate the potential of ICTs for rural
development. For example, M. S. Swaminathan, the
renowned agriculture scientist responsible for the “Green
Revolution” in India, is promoting the development of vil-
lage kiosks. Through the Village Knowledge Centre Project
of the M. S. Swaminathan Research Foundation (MSSRF)
near Puducherry, India, these kiosks can supply important
information to farmers who need it most. A wealth of infor-
mation—from weather data to information about crops,
livestock management, healthcare, jobs, and so on—is
provided to villagers through this network of kiosks.
MSSRF is not alone in its efforts to reach out to the
rural population. Mobile applications such as MKrishi are
providing similar services to empower farmers, and since
2004, the government of India rolled out its Common Service
Centres (CSCs) initiative, establishing 100,000 CSCs spread
out in 600,000 villages in India. Through this network of IT
centers, government delivers better social services and
relevant information to the people. The CSCs are IT-enabled
kiosks with a PC, printer, scanner, and so on. They use wire-
less connectivity to provide social services, infotainment,
and telemedicine, among other services, for the benefit of
the people.
Another notable initiative from academia is the
“Simputer” project from the Indian Institute of Science.
A simputer is an innovative, low-cost computing device
with simple, natural interfaces based on sight, touch, and
audio, thus eliminating the need for computer literacy. For
half the cost of a PC, anyone can have an affordable but
functional technology device and thus connect and interact
with the rest of the world.
Technology companies such as Tata Consultancy
Services (TCS) have also developed innovative products
and services to tackle the problems of the rural areas. The
Computer Based Functional Literacy (CBFL) program was
developed to aid almost 350 million Indians, who cannot
read and write, to be literate. Thousands of lives have
already been changed with this program, and experts esti-
mate that this project can make almost 90 percent of India
functionally literate in three to five years. The CBFL project
is already functional in seven Indian states; interestingly,
it will now be exported to South Africa where a version in
the Northern Sotho language—one of 11 in the country—is
scheduled to start running in the Lephalale municipality of
Northern Province this year.
Banking the unbanked: Improving e-governance
Banks in India have a mandate to provide services to
52 percent of India’s unbanked population living in semi-
urban and rural areas of the country. The available banking
solutions have not been very strong in delivering services
and increasing their reach on this front. Entire villages
remain unbanked. In 2008, the State Bank of India (SBI) had
estimated that 500,000 villages in India remained unbanked
and set itself a target to bank 100,000 of these in two years.
This target was achieved in May 2010. Now the SBI is
looking to target 50,000 more villages in the current financial
year. Technology can play an instrumental role here, with
new technology platforms such as cloud computing having
the potential to bring about dramatic change. TCS has
developed a new banking solution—called Bank in a Box,
which is live in 2,000 bank branches in India—that delivers
specialized software services using cloud computing. As
per this solution, small rural banks can share a platform that
rests on a central “cloud.” This approach offers small banks
and credit unions a secure and reliable platform that is
constantly updated but inexpensive to use. Small banks can
now easily have the right technological backbone to deliver
services to their customers without making high capital
investments.

State government initiatives to bring information to the
people have been hugely successful in empowering citi-
zens and improving government services in many respects.
The Bhoomi project of the Karnataka state government has
computerized handwritten land records, allowing farmers
to walk up to a village kiosk and access their land records
by using a touch screen interface. The Andra Pradesh
government developed AP Online, a Web portal that allows
citizens to pay utilities, submit applications, register for dif-
ferent programs, or even initiate complaints online through
a network of 6,000 kiosks set up in the state. Initiatives such
as these have started to shift power into the hands of the
people and demonstrated improved governance.
Moving from proven potential to large-scale execution
Agri-input providers and retail companies are also tapping
into the massive rural market through innovative ICT appli-
cations. For example, DCM Shriram Ltd. has set up more
than 300 Hariyali Kissan Bazaars, or rural business centers,
to provide 24/7 agriculture support; important inputs such
as seeds, fertilizers, and so on; and access to banking and
retail outlets. Godrej Aadaar is an example of a similar agri-
Using Information and Communication Technologies to Boost India’s Competitiveness
service cum retail venture from the Godrej group, providing
guidance, goods, information (price information, weather
data, insurance). This program also facilitates credit to
farmers under the same roof.
Many of these projects by the governments and busi-
nesses have seen great success in their pilot phases,
proving that there is clearly great potential for ICT use for
development in rural areas. Distance education, e-learning,
telemedicine, and banking solutions are just some of the
areas where ICT can and is being used. However, as of
now, the benefits of these ICT initiatives remain limited to
certain pockets of rural India where these programs have
been piloted. The key to bridging the digital divide lies in
scaling up these programs and applications and imple-
menting them on a broader, countrywide scale, as the SBI
plans to do with banking.
Only when this has been accomplished will it truly be
rural India’s “Great Leap Forward.”
Note
1 US Department of Commerce and NTIA 1995.

Table 9: Availability of scientists and engineers: next few decades (see Figure 12 for India’s demographic
India and selected comparators, 2008–2009 weighted pyramid in 2010, 2025, and 2050), the country is well
average* placed in terms of human capital availability going 21
forward as long as it continues to increase the penetration
Country/Economy Rank Score of education throughout the growing population.
Finland 1 6.01 The quality of scientific research institutions is
Japan 2 5.89 another competitive advantage for the country at 25th
Sweden 3 5.65 place, with a score of 4.89, better assessed than the
India 4 5.62
regional average (3.61) and China (4.43, 35th) (see Table
United States 5 5.60
10). The strong reputation of the 16 Indian Institutes of
Canada 6 5.52
Technology (IITs) contributes to this positive assessment,
Taiwan, China 7 5.49
given that they are considered the best technical schools
Iceland 8 5.39
in India, with increasing international recognition.30 The
Tunisia 9 5.39
Switzerland 10 5.29
20 National Institutes of Technology (NITs) and the 12
France 11 5.27
Indian Institutes of Information Technology (IIITs) are
Ireland 12 5.25 also building a strong reputation in their field. Separate
Qatar 13 5.22 from these networks, the Indian Institute of Science
Singapore 14 5.18 (IISc), located in Bangalore, is also recognized as a
Puerto Rico 15 5.14 prominent research institution.31
Israel 16 5.12 In particular, the IITs mentioned above were
Belgium 17 5.10 established from the 1950s onward by many states as
Denmark 18 5.10 a group of autonomous higher education institutes,
Norway 19 5.10 specializing in engineering and scientific disciplines to
Greece 20 5.08 ensure an adequate supply of employable and trained
Indonesia 31 4.73 talent. IITs receive almost 10 times more generous grants
Malaysia 33 4.70 than other science and engineering colleges in India,
China 36 4.61 a sum to which one has to add students’ tuitions and
Brazil 60 4.24 sponsored research. A key feature of the IITs’ strategy is
Vietnam 62 4.21
that they are linked to a chain of national laboratories,
Pakistan 83 3.89
specialized R&D agencies in defense, atomic energy and
* To what extent are scientists and engineers available in your country? space, and universities and other academic institutions
(1 = not at all; 7 = widely available)
Source: World Economic Forum, Executive Opinion Survey 2008, 2009. that are capable of providing world-class expertise
Note: Blue indicates comparators discussed in the text; black indicates and technology support to the industry. IITs are also
the top 20 economies in this variable, other than the comparators.
Using Information and Communication Technologies to Boost India’s Competitiveness

Figure 12: India’s demographic pyramids by age group, 2010, 2025 and 2050

India 2010
Male Female
100
age 25–45 95 age 25–45
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
65 52 39 26 13 0 0 13 26 39 52 65
Population (in millions)

India 2025
Male Female
100
age 25–45 95 age 25–45
90
85
80
75
70
65
60
22 55
50
45
40
35
30
25
20
15
10
5
0
65 52 39 26 13 0 0 13 26 39 52 65
Population (in millions)

India 2050
Male Female
100
age 25–45 95 age 25–45
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
65 52 39 26 13 0 0 13 26 39 52 65
Population (in millions)

Source: US Census Bureau, Population Division.

 Using Information and Communication Technologies to Boost India’s Competitiveness
Table 10: Quality of scientific research institutions: FDI attraction, investment in human capital needs to
India and selected comparators, 2008–2009 weighted continue and be reinforced.
average* Box 4, authored by Ajoyendra Mukherjee, Abhinav
Kumar, and Pradipta Bagchi of Tata Consultancy
Country/Economy Rank Score Services, addresses the issue of talent challenge for the
Switzerland 1 6.19 IT industry in India.
United States 2 6.18 Education ranks high in the government agenda. For
Israel 3 5.99 instance, in 2000 the National Council for Education
United Kingdom 4 5.89
Research and Training introduced the National
Germany 5 5.77
Curriculum Framework School Education, introducing
Sweden 6 5.71
the use of computers in the curriculum, enhancing
Netherlands 7 5.70
learning opportunities by using ICT across the
Belgium 8 5.70
curriculum, and increasing inter-disciplinary and cross-
Denmark 9 5.70
Australia 10 5.70
disciplinary areas in the design of curricula.
Canada 11 5.68
Singapore 12 5.63 Readiness subindex
Finland 13 5.58 If a conducive environment is the first step for new tech-
New Zealand 14 5.40 nologies to thrive, for a society as a whole to leverage the
Japan 15 5.34 revolutionary power of those technologies in the daily
Ireland 16 5.30 lives and activities of its people, a certain degree of prep-
France 17 5.22 aration, interest, and willingness on the part of the main
Taiwan, China 18 5.18 social actors who would use them is required. Therefore
Czech Republic 19 5.14 individuals, the business sector, and the government
Norway 20 5.12 should have, on one hand, the preparation necessary to
India 25 4.89 see the beneficial impact of integrating ICT into their
Malaysia 28 4.73
activities and, on the other hand, they should also have
China 35 4.43 23
the inclination to do so. In particular, the government
Brazil 41 4.22
should be aware of the importance of innovation and
Indonesia 43 4.20
new technologies for enhanced development, efficiency,
Vietnam 64 3.72
and better living conditions and have a coherent vision
Pakistan 81 3.55
for ICT in place, while the educational system should
* How would you assess the quality of scientific research institutions in
your country? (1 = very poor; 7 = the best in their field internationally) ensure that individuals and businesses are prepared to
Source: World Economic Forum, Executive Opinion Survey 2008, 2009. use and develop new technologies. A related condition
Note: Blue indicates comparators discussed in the text; black indicates needed for ICT usage to spread is its affordability for
the top 20 economies in this variable, other than the comparators.
individuals and businesses.
The readiness subindex measures the degree of
preparation defined above for the three main societal
connected to networks of small and medium enterprises, stakeholders. This preparation includes the existence
generating a flow of knowledge for technology of appropriate skills for using ICT (at the individual
development and industry commercialization. and business level), ICT affordability, and a well-
However, the tertiary education enrollment rate at developed government vision for ICT. The subindex
11.8 percent and education expenditure at 3.2 percent comprises a total of 21 indicators, organized into
of GNI are very low by international standards (ranking three pillars along the lines of individual, business, and
100th and 94th, respectively) and loom as potential government readiness.
bottlenecks to India’s capacity to turn the demographic India posts its most impressive showing across the
dividend into skilled, low-cost, qualified workers and three subindexes in readiness, with a rank of 22nd.
researchers. Moreover, in India there is often a mismatch The country is separated from best sample performers
between knowledge and practice among the professional United States (7th) and Malaysia (11th) by a small
labor force.32 gap, displaying a performance similar to that of China
NASSCOM, the Indian National Association of (19th). The country largely outperforms the rest of the
Software and Services Companies, estimated in 2008 sample, including the OECD average (5.07 vs. 4.79).
that, of the 350,000 engineering graduates every year, The difference in score compared with that of its own
25 percent are unemployable without extensive further income group average is particularly accentuated: 5.07 vs.
training, and half are unemployable.33 4.00, a large 1.07 gap.
Taking into account the importance of skilled labor India’s three main stakeholders appear to be fairly
for the continuing development of the ICT sector and ready to use ICT: individuals in particular display
Using Information and Communication Technologies to Boost India’s Competitiveness
Box 4: India’s coming employment challenge
AJOYENDRA MUKHERJEE, ABHINAV KUMAR, and PRADIPTA BAGCHI, Tata Consultancy Services
India, with its population of about 1.2 billion people grow-
ing at 1.4 percent a year, is heading toward a demographic
turning point. The country already has a large untapped
talent pool waiting to be absorbed (unemployment stood
at 10.7 percent in 2010 for a labor force of 460 million), and
it will see an estimated 240 million additional youths enter
the labor market in the next 20 years. The trend will reach
its peak and India will emerge as the world’s largest labor
market in 2035, with about 65 percent of its population com-
ing into the working-age category. This creates an immense
challenge to generate sufficient employment in the country.
There are two extreme scenarios that may emerge from
this trend. The best-case scenario is that more people enter-
ing the workforce could boost economic growth, resulting in
a “demographic dividend.” Or, in the worst-case scenario, a
burgeoning labor force that outpaces employment creation
could end up creating social and civil unrest and reduced
welfare levels in the country, souring the dividend into a
“demographic time bomb.”
In the search for solutions to quench the country’s thirst
for employment, the Indian government and businesses have
been looking at employment-generation drivers in various
sectors. The information technology and business process
outsourcing (ITeS-BPO) industry is widely considered one of
24 the drivers of future employment in India. The industry lies
at the center of the country’s economic growth, drawing on
its English-speaking and highly skilled talent pool. Improved
infrastructure and facilities, quality IT talent, the potential
for innovation, a cost-effective business environment, and a
favorable legal framework have coincided to make India the
world’s leading services outsourcing destination. Much of
India’s modern reputation as a knowledge superpower and
a global hub has been built on its successful IT industry. This
is a success story that is expected to continue to play an
important role in employment generation.
ITeS-BPO impact on employment and the economy
Over the past decade the ITeS-BPO industry has contributed
materially to India’s emerging economy, generated employ-
ment, and brought foreign direct investment into India.
India’s ITeS-BPO industry has managed to generate
significant employment in the previous decade, growing
sixfold from a workforce of just 430,000 employed in 2001
to about 2.3 million people directly employed in total (as of
October 2010). This represents an additional 200,000 jobs
over the previous year. Even more impressive is the indirect
employment it has created. Estimates suggest that 8 million
people are indirectly employed by the sector, providing
ancillary services such as real estate, catering, trans-
portation services, retailing, and so on. It is this multiplier
employment effect and its future potential that, above all,
has policy-makers following the success of the ITeS-BPO
industry with close interest.
The top 20 IT companies in India include both Indian
companies and foreign multinationals. Indian firms such
as Infosys, Wipro, HCL, Mahindra Satyam, and Tata
Consultancy Services (TCS) have significantly expanded
their operations in India and abroad, further adding to
employment creation in the country. While TCS, the market
leader, employs 160,000 workers, the top five companies
employ a total of 480,000, accounting for 20 percent of
employment across the sector. The Indian ITeS-BPO sector
now consists of over 5,000 companies providing services
to companies across the world in different service lines
and verticals. Many of these companies are multinationals
that have invested directly, such as HP, IBM, Dell, Ingram-
Micro, SAP, Microsoft, and Google. The Indian operations
of these companies have shown strong growth, prompting
many of them to decide to shift more of their operations to
India. For example, Microsoft has been operating in India
since 1990 and its research center in Bangalore carries out
cutting-edge research for the company globally.
In economic terms, the sector clocked in US$71.7 billion
in revenues in 2009–10, accounting for 5.8 percent of India’s
GDP. Given that IT employment is just 0.49 percent of the
country’s total labor force, the industry is creating immense
economic value for the country, over and above its obvious
impact on direct employment.
Engaging the hinterland
Over the past decade, the ITeS-BPO industry has grown
by creating IT hubs in or just outside of major cities. About
95 percent of India’s ITeS-BPO exports can be attributed
to seven major cities, including Bangalore, Mumbai,
and Delhi among others. IT hubs in the country have
been at the heart of economic development and Indian
IT companies have some of the largest campuses and
business parks in the country, with world-class facilities.
For example, the country’s largest campus—which is
operated by TCS in Siruseri, on the outskirts of the south
Indian city of Chennai—sits on 70 acres of land and is the
largest IT facility of all of South Asia, with 22,000 engineers
working in a single facility. As a result of this centraliza-
tion, workers have migrated to cities where IT companies
have set up centers to meet the demand. The movement
of IT workers to these areas has generated an increased
need for housing, infrastructure, food, entertainment, and
other facilities. Therefore, these hubs ended up not only
incorporating specialist talent but also generating a mas-
sive movement of indirect employment.
With demand for labor in major cities heating up and its
accompanying infrastructure challenges, this approach of
centralization is now changing.
Studies show that IT companies are not only setting
up centers in big cities, but they are increasingly mov-
ing toward Tier II/III cities such as Indore and Lucknow,
instead of the traditional Gurgaons and Bangalores. As
India’s reputation as a location that provides high pro-
ductivity and extremely flexible offshoring opportunities
increases, companies are moving their operations to
smaller towns, thus reducing the need for labor to migrate
from rural areas to big cities. Better job opportunities also
motivate the youth to take up education more seriously in
these previously underdeveloped areas. NASSCOM studies
show that about 35 rural BPO centers provide employment
to about 5,000 people, greatly improving the living condi-
tions near these rural centers. Various companies have
entered this space, and this number is expected to grow
more than 10 times—to about 65,000 employees in the next
three years.

Demand and supply will keep India competitive
The demand side situation of the industry continues
to be healthy and recovering rapidly from the financial
crisis. According to the Indian Department of Information
Technology’s Annual Report,1 India’s IT/ITeS-BPO industry
is expected to garner revenue of about US$73 billion in
2009–10, and the report predicts that the revenues may
reach up to US$225 billion in 2020. Indian software services
exports are expected to reach US$49.7 billion in 2009–10,
along with an exploding domestic market that has grown
almost four times in size since 2003 to approximately
US$25 billion. The growing need for ITeS-BPO services will
continue to fuel a strong demand for Indian IT companies,
both globally and domestically.
The supply side continues to look strong, given the
upcoming demographic dividend. The large pool of highly
educated workers is one of the fundamental reasons that
Indian and multinational companies have set up operations
in the country, and this advantage will continue for the
foreseeable future. About 3.4 million students are expected
to graduate from Indian colleges this year. India produced
about 500,000 engineering graduates in 2009; roughly 35
percent of them are Computer Science graduates. Given
that the industry is expected to hire between 150,000 and
200,000 personnel over the coming year, there continue to
be ample opportunities for this educated labor force.
Since salaries in the IT sector in India are considerably
higher than they are in other industries, an increasing por-
tion of the labor force now considers IT to be an attractive
career option that provides high wages and career growth.
This perception has improved the attractiveness of IT as a
career choice, encouraging more people to take up educa-
tion in science and technology–related areas and thus
creating a cycle of future labor supply.
Is IT the magic pill for employment?
There are two sides to India in terms of living conditions,
economic growth, and social development. There are 300
million Indians whose lifestyles are getting closer to and
an outstanding level of preparedness by international
standards (ranked 7th globally). The business sector
follows at 23rd, while the government stands out as
the least ready social actor in India, with a nevertheless
satisfactory rank of 35th.
Individual readiness
The individual readiness pillar captures the quality of
the national educational system, with a special focus on
science and math, together with the affordability of the
main ICT, including telephony and fixed broadband,
looking at a total of eight indicators (see Figure 13).
India ranks 7th for its individual readiness—its
best performance across the nine NRI pillars. This
remarkable showing places the country at the forefront
of the comparator group, ahead of the United States
(19th), Malaysia (11th), and, by a large margin, the
OECD average (5.69 vs. 4.88). Interestingly enough,
most comparator countries (with the exception of Brazil,
which ranks a poor 99th) tend to do rather well in this
Using Information and Communication Technologies to Boost India’s Competitiveness
comparable to those in the developed world. Then there
is the larger group of 700 million who are left relatively
untouched by the “shining” India and struggle for eco-
nomic viability. About 50 percent of India’s population still
live in rural areas and work in agriculture. Only 60 percent
of the population have basic literacy skills. For the rural
masses, the IT revolution and employment opportunities
are still not a reality.
The challenge for India is to create equal employment
opportunities for all. IT is India’s globally recognized suc-
cess story, but its ability to generate employment remains
restricted largely to the highly educated segment of the
labor force.
While the ITeS-BPO sector will remain critically
important from an economic perspective, investment
must also go into other sectors such as manufacturing
and large-scale infrastructure projects (roads, railways,
among others). Since these projects have the potential to
create jobs for large numbers of people who have minimal
skills, education, and training, they will help balance the
economic inequalities in the population.
On the wings of favorable demand and supply condi-
tions, India’s software association NASSCOM estimates
that the ITeS-BPO sector will create direct employment
for 10 million and indirect employment for 20 million by
2020. While this would represent an unprecedented 5-fold
growth in direct and 2.5-fold growth in indirect employ-
ment, it is clearly not the single magic pill that will solve the
larger issue of creating employment for the estimated 100
million who will enter the labor force in the next decade. 25
Hence, although the ITeS-BPO industry is an important and
absolutely essential part of the solution, India must also
developed a broader strategy to generate jobs in other
sectors to ensure that its demographic dividend gets paid
out in full.
Note
1 GoI (Government of India), Department of Information
Technology, 2009.
dimension, and even the Developing Asia average (4.77)
is not far behind that of the OECD.
India’s outstanding individual readiness rests on
its good educational fundamentals, already discussed
in the infrastructure pillar, coupled with the country’s
very affordable access to ICT. As displayed in Table
11, the quality of the educational system is assessed
at 37th, second only to the United States (22nd) and
Malaysia (23rd) in the comparator sample. The country
outperforms by a large margin comparators Brazil
(103rd), Pakistan (99th), and Vietnam (85th), as well as
the regional average (4.36 vs. 3.65).
This encouraging tendency is even more marked
for the quality of math and science education, which
is especially important for generating ICT skills, and
a propitious environment that allows innovation to
flourish. As already mentioned, India’s educational
system is very much focused on science, math, and
engineering. As a key element of its development
strategy, the government has strongly supported IT
Using Information and Communication Technologies to Boost India’s Competitiveness
Figure 13: Individual readiness in India
Fixed telephone
lines tariffs*: 19
Mobile cellular tariffs*: 3
Fixed broadband tariffs*: 3
,U]PYVUTLU[
Residential monthly
telephone subscription*: 39
*Quantitative data
Source: World Economic Forum, 2010.
education, especially in the main universities and
26 colleges. At the same time, it has focused on vocational
education, ensuring that a very large number of excellent
programmers are trained every year. This is mirrored in
the remarkable availability of scientists and engineers, as
highlighted in the infrastructure pillar.
India places 22nd for the quality of its science and
math education, the first in the sample (see Table 12),
largely outdoing even the United States (48th) and the
OECD average (5.03 vs. 4.47). Again the contrast with
fellow BRIC Brazil (123rd) is noteworthy: the two
countries are separated by a gap of 101 places.
The other “leg” of India’s individual readiness is ICT
affordability. The NRI includes the cost of residential
telephone connections and monthly subscription charges
as well as fixed broadband, mobile cellular, and fixed
telephone tariffs. In line with ITU methodology, all
these indicators are valued at purchasing power parity
(PPP) to account for differences in the cost of living
across countries and provide a measure of actual ICT
affordability. As a result of the major reforms undertaken
to liberalize the telecommunications market already
mentioned—including easier licensing procedures,
reduction of interconnection charges, revenue-sharing
practices instead of one-time licensing fees, market
innovation, and better competition conditions with more
than two operators in fixed and mobile services—India
fares extremely well in terms of ICT access costs.
India ranks 3rd for both mobile cellular and fixed
broadband tariffs, surpassing all countries/regions in the
comparator sample (except the United States for fixed
broadband tariffs, ranked 2nd). Just to give an example:
Quality of math &
science education: 22
Quality of the
educational system: 37
7

Individual
4HYRL[
readiness
Buyer sophistication: 33
Residential telephone
connection charge*: 8
India’s mobile cellular tariffs in 2008 were PPP$0.07, as
compared with PPP$0.17 for China (17th), PPP$0.25
for the United States (34th), PPP$0.37 for the OECD
average, and PPP$0.99 for laggard Brazil (118th).
Likewise, India’s fixed broadband tariffs amounted
in the same year to PPP$16.40, as compared with
PPP$36.76 for China (55th), PPP$28.89 for the OECD
average, and PPP$56.50 for Brazil (76th). Furthermore,
fixed telephone tariffs in India are also very low by
international standards: PPP$0.05 (19th). While India is
second to Brazil in the sample (1st, with tariffs next to 0),
it outdoes the rest of the comparator sample, in particular
the United States (PPP$0.24, 90th) and the OECD
average (PPP$0.18). And finally, residential telephone
connection charges are also very competitive in India,
ranked 8th globally and 1st in the sample: PPP$19.19
in 2008 vs. PPP$39.00 (25th) for the United States,
PPP$76.50 for Brazil (64th), and PPP$99.28 for the
OECD average.
Business readiness
The business readiness pillar provides information on
the extent to which companies in a country are willing
to incorporate ICT into their operations, transactions,
and processes. Crucial enablers of business readiness are
considered: the quality of the educational and research
environment at large (including training, management
schools, and the development of collaboration between
industry and academia, among others), and the avail-
ability and charges/subscription costs for telephone lines
for businesses. Also the imports of computer, commu-
nications and other services are taken into account to
 Using Information and Communication Technologies to Boost India’s Competitiveness
Table 11: Quality of the educational system: India and Table 12: Quality of math and science education: India
selected comparators, 2008–2009 weighted average* and selected comparators, 2008–2009 weighted average*

Country/Economy Rank Score Country/Economy Rank Score

Singapore 1 6.22 Singapore 1 6.43

Switzerland 2 6.03 Finland 2 6.36
Iceland 3 5.97 Qatar 3 6.08
Finland 4 5.87 Belgium 4 6.08
Canada 5 5.73 Switzerland 5 5.71
Denmark 6 5.69 Taiwan, China 6 5.56
Belgium 7 5.60 Tunisia 7 5.53
Ireland 8 5.56 France 8 5.51
Cyprus 9 5.53 New Zealand 9 5.45
Qatar 10 5.50 Czech Republic 10 5.41
New Zealand 11 5.32 Hong Kong SAR 11 5.39
Sweden 12 5.28 Barbados 12 5.39
Barbados 13 5.24 Cyprus 13 5.38
Australia 14 5.21 Canada 14 5.31
Netherlands 15 5.17 Denmark 15 5.23
Norway 16 5.10 Netherlands 16 5.21
Taiwan, China 17 4.99 Estonia 17 5.20
Austria 18 4.92 Korea, Rep. 18 5.19
Tunisia 19 4.89 Slovenia 19 5.17
United Arab Emirates 20 4.89 United Arab Emirates 20 5.15
United States 22 4.85 India 22 5.03
Malaysia 23 4.84 Malaysia 34 4.81
India 37 4.36 China 35 4.81
Indonesia 44 4.07 United States 48 4.47 27
China 52 3.83 Indonesia 50 4.46
Vietnam 85 3.30 Vietnam 53 4.44
Pakistan 99 3.04 Pakistan 93 3.40
Brazil 103 3.01 Brazil 123 2.71
* How well does the educational system in your country meet the * How would you assess the quality of math and science education in
needs of a competitive economy? (1 = not well at all; 7 = very well) your country’s schools? (1 = poor; 7 = excellent—among the best in
Source: World Economic Forum, Executive Opinion Survey 2008, 2009. the world)

Note: Blue indicates comparators discussed in the text; black indicates Source: World Economic Forum, Executive Opinion Survey 2008, 2009.
the top 20 economies in this variable, other than the comparators. Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators.

provide a full picture of the extent of ICT available in
the country for business activity. A total of 10 variables
compose this pillar, as per Figure 14.
At 23rd, India displays a fairly high business readiness,
second only to those of the United States (8th), Malaysia
(26th), and the OECD average (4.93 vs. 4.99) in the
comparator sample. If the Indian business sector appears
very inclined to use ICT to improve its efficiency, it
has to be said that this is the case for most of the big
emerging markets included in the sample, notably
China (34th) and Brazil (38th). It is not by chance
that all these economies have seen the emergence of
extremely innovative companies able to compete in the
international market thanks to the successful integration
of new technologies into their products
and processes. India, in particular, is home to very
successful IT companies of the likes of Tata Consultancy
Services, Wipro, and Infosys, which have become global
players and have also started to expand their operations
and presence in overseas markets, including China
(Infosys and Wipro), France and Brazil (Wipro for its
embedded software design), and Egypt, among others.34
Among the different dimensions captured in this
pillar, India can rely on fairly developed staff training
(34th) and specialized research and training services
(32nd), complemented by world-class management
schools (15th).35 Companies are perceived to be spending
a good amount on R&D (36th), while university
industry collaboration in R&D could be further
strengthened (46th). India has been very successful so
far in absorbing and leveraging imported technology,
thanks to its large pool of qualified engineers and trained
IT professionals. However, it has been less successful
in developing endogenous innovation: the number of
utility patents per million population granted to Indians
in 2008 was 0.5, a far cry from top performer Taiwan
(279.2) or the United States (250.9) (see Table 21 in the
business usage pillar). Creating links and collaboration
between academia and industry is crucial for the
development of applied innovation that can be converted
Using Information and Communication Technologies to Boost India’s Competitiveness
Figure 14: Business readiness in India
Availability of new
telephone lines: 36
Computer, communications,
other services imports: 25
Local supplier quality: 41
,U]PYVUTLU[
Business monthly telephone
subscription*: 14
Business telephone
connection charge*: 3
*Quantitative data
Source: World Economic Forum, 2010.
28 Box 5: Export processing zones as horizontal integrated clusters: The Indian experience
ROBERTO CROTTI, World Economic Forum
According to the World Bank definition, an export process-
ing zone (EPZ) is a territorial or economic enclave in which
goods may be imported and manufactured and reshipped
with a reduction in duties and/or minimal intervention by
custom officials. The main objective of an EPZ is to attract
foreign direct investment in a country and to promote
economic growth by fostering exports. Other than benefiting
from duties and tax exceptions, a firm operating in an EPZ
enjoys additional relevant advantages such as uninterrupted
power supply, cost-effective labor supply, water connection,
infrastructures, and medical facilities. Starting in the 1970s,
several EPZs were established with different outcomes, not
always successful, across and within countries.
When the first EPZs were established, India did not have
a clear objective or a focused overall strategy for them.
Moreover, EPZ regulation was not attractive for foreign
investors because, despite benefiting from lower production
costs, there were still too many binding constraints and
bureaucratic procedures.
Indian EPZs therefore struggled to generate export
growth. The situation improved with the market reforms
undertaken in the 1990s, which also created clusters of
high-tech industries (for instance, with the creation of soft-
ware technology parks) and redesigned the EPZs as special
economic zones (SEZs)—that is, larger areas with more
flexibility on labor and utility regulations, simplified custom
rules, and one-stop authority.
Extent of staff training: 34
Local availability of
research & training: 32
23

Business
4HYRL[ Quality of management
readiness
schools: 15
Company spending
on R&D: 36
University-industry
collaboration: 46
The Santacruz Electronic Export Processing Zone
(SEEPZ) is a particularly successful case study among
EPZs, which achieved among the best results in India in
terms of goods and services exports. SEEPZ was set up
as an area specializing in electronics (and jewelry), which
then evolved into an electronic and IT services cluster. As
some authors observe,1 successful EPZs tend to specialize
in particular industries according to the availability of local
resources, developing into horizontal integrated clusters. In
this regard, crucial preconditions for the success of SEEPZ
have been its specialization in the electronics industry
and its location near a city port, coupled with the country’s
availability of well-educated workers in the engineering
field and the market-friendly changes in the institutional
set up. Additionally, in the longer run, EPZs need to be
linked to the national economy in order to develop clusters
of horizontally and vertically integrated industries; this is
especially true for high-tech industries. Its location near
Mumbai and surrounding suitable infrastructures also
contributed to SEEPZ’s remarkable performance.
The story of SEEPZ shows how promoting growth by
fostering the creation of clusters requires removing all the
problematic factors for investors simultaneously, laying the
foundation for an overall attractive and business-friendly
environment.
Note
1 See Aggarwal 2005.

Figure 15: Government readiness in India
Government procurement of
advanced tech. products: 68
Government prioritization of ICT: 19
35

Government
4HYRL[
readiness
,U]PYVUTLU[
Source: World Economic Forum, 2010.
into products and services with a commercial value. On
a positive note, NASSCOM, together with a number
of state governments, is promoting the development
of linkages among technology industries, universities,
and research institutions to foster joint research projects
and innovation. Box 5 provides an overview of the
export processing zones (EPZs) initiative aimed at
promoting exports by creating clusters of knowledge and
innovation.
With respect to telephony availability and
affordability, at 36th place, new telephone lines for
businesses are perceived as quite easy to obtain, much
easier than in China (65th) or in Developing Asia (6.34
vs. 5.34). Affordability is not an issue either, since business
telephone connection charges and monthly subscriptions
are low by international standards, at PPP$19.09 (3rd)
and PPP$7.46 (14th) respectively. To put these figures
into context, business telephone connection charges
amounted to PPP$72.3 in the United States (41st) and
PPP$101.4 for the OECD average in 2008. Business
monthly telephone subscriptions in turn were PPP$45.3
in the United States (117th) and PPP$23.0 for the
OECD average.
Government readiness
The government readiness pillar offers insight into the
government’s vision and prioritization of ICT in the
national agenda, both as a target sector and as enabling
infrastructure, notably for better and extended service
provision to citizens. This pillar includes three variables:
gauging government ICT prioritization and its impor-
tance in the overall vision for future competitiveness
Using Information and Communication Technologies to Boost India’s Competitiveness
Importance of ICT to government
vision of the future: 38
together with the government procurement of advanced
technology products as a way to foster innovation in the 29
country (see Figure 15).
India ranks a satisfactory 35th for its government
readiness, being nevertheless the least ready national
stakeholder, after individuals and the business sector,
when it comes to using and leveraging ICT. The Indian
government’s readiness outperforms, at 4.58, the average
readiness of its income group (3.85), Developing Asia
(4.18), and even the OECD (4.51), not to mention
Indonesia (64th), Brazil (68th), and Pakistan (90th).
However, it still lags behind Malaysia (11th), the United
States (13th), and China (14th). This situation highlights
the government’s opportunity to move ICT closer to the
center of its development agenda and use it as a unique
tool to foster national competitiveness, greater efficiency,
and better and enlarged access to basic services for all
citizens. A new Executive Opinion Survey question
introduced in 2010 assessing the extent to which ICT
is improving citizens’ access to basic services (including
health, education, and financial services) ranked India
a rather low 43rd (see Table 13), way below relevant
comparators such as Malaysia (15th) and China (21st).
On a more encouraging note, as shown in Figure 6,
India’s government readiness has improved over the
years: up nine places in a constant 2002 sample since
that year (from 33rd to 24th), pointing to an increasing
government awareness of the role ICT could play for
overall national development.
Of the three dimensions measured in the pillar,
government prioritization of ICT is the best assessed at
19th (see Table 14). In this dimension, India clusters with
Using Information and Communication Technologies to Boost India’s Competitiveness

Table 13: ICT and access to basic services: India and Table 14: Government prioritization of ICT: India and
selected comparators, 2010* selected comparators, 2008–2009 weighted average*

Country/Economy Rank Score Country/Economy Rank Score

Sweden 1 6.15 Singapore 1 6.37

Singapore 2 6.11 Malta 2 6.36
Qatar 3 6.11 Qatar 3 6.19
Taiwan, China 4 6.06 United Arab Emirates 4 6.17
United Arab Emirates 5 6.03 Finland 5 6.05
Luxembourg 6 5.76 Denmark 6 6.00
Iceland 7 5.76 Tunisia 7 5.98
Korea, Rep. 8 5.73 Portugal 8 5.95
Malta 9 5.67 Estonia 9 5.84
Portugal 10 5.64 Taiwan, China 10 5.83
Bahrain 11 5.63 Sweden 11 5.80
Hong Kong SAR 12 5.60 Luxembourg 12 5.72
Tunisia 13 5.60 Bahrain 13 5.69
Denmark 14 5.53 Malaysia 14 5.67
Malaysia 15 5.50 Iceland 15 5.65
Norway 16 5.49 United States 16 5.62
Oman 17 5.48 China 17 5.55
Estonia 18 5.48 Gambia, The 18 5.55
Switzerland 19 5.44 India 19 5.53
Saudi Arabia 20 5.38 Switzerland 20 5.52
China 21 5.36 Vietnam 34 5.25
United States 22 5.30 Indonesia 71 4.50
India 43 4.88 Pakistan 74 4.45
30 Vietnam 47 4.79 Brazil 75 4.44
Brazil 50 4.73 * How much priority does the government in your country place on
Indonesia 69 4.46 information and communication technologies? (1 = weak priority; 7 =
high priority)
Pakistan 84 4.22
Source: World Economic Forum, Executive Opinion Survey 2008, 2009.
* To what extent are information and communication technologies
Note: Blue indicates comparators discussed in the text; black indicates
improving access for all citizens to basic services (health, education,
the top 20 economies in this variable, other than the comparators.
financial services, etc.) in your country? (1 = do not improve access
at all, 7 = improve access significantly)
Source: World Economic Forum, Executive Opinion Survey 2010.
Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators. of public administration, simplifying procedures for
business matters, and bringing public services closer
to citizens.36 The plan included several different
the United States (16th) and China (17th), prioritizing projects; defined mission mode projects (MMPs) to be
the sector much more than Developing Asia or the implemented at integrated, central, or state levels; and
OECD on average (5.53 vs. 4.73 and 5.02, respectively, affected almost all sectors and procedures (see Table 16).
for the regional and OECD averages). India also In order to achieve the objectives of the projects,
outperforms sample laggards Indonesia (71st), Pakistan the plan provided for the setting up of a capillary and
(74th), and Brazil (75th) by a large margin. secure countrywide ICT infrastructure to reach remote
In addition, the government appears to have a fairly villages,37 as well as for the adoption of standards and
clear implementation plan for utilizing ICT to improve security protocols. Although it is early days for assessing
the country’s competitiveness, ranked 38th (see Table 15). the plan, given its complexity and relative novelty, it is
However, in relative terms, although India does much certainly an important step in the right direction: if the
better than Brazil (64th) and Indonesia (85th), it lags national and local authorities are able to fully implement
behind Malaysia (11th) and China (13th), whose vision the plan, India will benefit from a more efficient and
for ICT appears to be more developed. inclusive system, which could in turn lead to a more
The government started focusing on the ICT sector competitive and prosperous country. Some of the main
as early as the 1980s, as already discussed, adopting challenges going forward will be the financing of the
relevant reforms and initiatives over the years to promote plan, especially at the local level; a possible regional
software exports, liberalize telecommunications, and divide if e-government projects provided by the plan
create a conducive environment for innovation and FDI, concentrate in the areas with a better infrastructure; and
notably by investing on education and training. In 2006, the low e-literacy level, especially in rural areas, which
a long-term National e-Governance Plan (NeGP) was could limit the impact of the plan unless it is backed by
developed, with the ambition of increasing the efficiency enabling educational programs.
 Using Information and Communication Technologies to Boost India’s Competitiveness
Table 15: Importance of ICT to government vision of The usage subindex comprises 17 variables grouped
the future: India and selected comparators, 2008–2009 into three pillars, along the individual, business, and
weighted average* government dimensions.
In the case of India, the country’s outstanding
Country/Economy Rank Score
readiness and propensity to use ICT does not seem
Singapore 1 6.47 to have translated yet into high levels of usage by its
United Arab Emirates 2 5.92 citizens, businesses, and government. On the contrary,
Malta 3 5.86
with a rank of 64th, ICT usage is India’s weakest area
Portugal 4 5.75
as assessed by the NRI. The country lags behind the
Qatar 5 5.71
United States (2nd), Malaysia (28th), China (36th), Brazil
Denmark 6 5.47
(47th), and the OECD average (3.25 vs. 4.60). It does
Tunisia 7 5.40
better, however, than other large emerging markets such
Korea, Rep. 8 5.39
Taiwan, China 9 5.35
as Indonesia (86th) and Pakistan (94th), as well as the
Sweden 10 5.33
lower-middle-income group (2.83) and Developing
Asia (3.01). This disappointing showing is very much
Malaysia 11 5.32
linked to the poor state of its national infrastructure
Estonia 12 5.29
China 13 5.27
highlighted above, which prevents individuals, businesses,
Hong Kong SAR 14 5.27 and the government to fully access and leverage new
Norway 15 5.16 technologies in their activities, transactions, and service
Gambia, The 16 5.13 provision.
Iceland 17 5.12 The degree of ICT usage appears to be distributed
Luxembourg 18 5.07 quite unevenly among the three main stakeholders
Finland 19 5.06 in India: while businesses and, to a lesser extent, the
Bahrain 20 5.06 government use ICT fairly effectively to improve their
United States 24 4.91 efficiency, innovation potential, and outreach (ranked
Vietnam 29 4.82 26th and 48th respectively), individuals, at 109th, display
India 38 4.64 extremely poor levels of usage. 31
Brazil 64 4.15
Indonesia 85 3.87
Individual usage
Pakistan 99 3.66 The individual usage pillar captures ICT penetration
* To what extent does the government have a clear implementation and diffusion at the individual level in a country by
plan for utilizing information and communication technologies to
improve your country’s overall competitiveness? (1 = no plan; 7 = measuring the following five dimensions: mobile and
clear plan) broadband Internet subscribers, Internet users, number
Source: World Economic Forum, Executive Opinion Survey 2008, 2009.
of PCs, and Internet access in schools (see Figure 16).
Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators. At 109th, individual usage is not only extremely
low in comparison with that of businesses and the
government, but it is also India’s worst showing across
the nine NRI pillars. Moreover, in relative terms, the
The most problematic aspect of Indian government’s country is the absolute laggard in the comparator sample
readiness is the extent to which it uses procurement to in individual usage, with a gigantic gap of 86 places
stimulate innovation in the country. India ranks 68th in vs. the sample’s best performer United States (16th).
this dimension, second to last in the comparator sample Interestingly, with a score of 1.83, it is also outdone by
(see Table 17), before Pakistan (87th) and trailing behind the lower-middle-income group (2.22) and Developing
by a large margin not only the United States (4th) and Asia (2.24) averages—the only case across all the NRI
Malaysia (9th), but also relevant comparators such as dimensions.
Vietnam (11th) and China (13th). This situation no doubt reflects the underdeveloped
state of the country’s infrastructure network coupled
Usage subindex with the huge divide existing between urban and rural
Once an adequately ICT friendly environment is areas when it comes to access to ICT.
in place and the main social actors display sufficient A look at the indicators included in the pillar
preparation and inclination to use ICT, a society is provides further insight into the magnitude of the
ready to actually use and leverage ICT for enhanced challenge to be overcome for usage to become universal
development and competitiveness. The last component or at least on a par with relevant comparators, including
of the NRI measures the extent to which an economy’s China (ranked 71st for individual readiness).
main stakeholders use the latest technologies, focusing Notwithstanding the remarkable growth and
notably on the impact of ICT in terms of increased dynamism Indian mobile communications have
efficiency, innovation, and productivity, as well as better experienced over the past decade, the country was still
service provision to citizens and greater e-participation.
Using Information and Communication Technologies to Boost India’s Competitiveness
Table 16: National e-Governance Plan: Mission mode projects
INTEGRATED PROJECT
Project Objective
1. E-Biz Simplify approval and
permission procedures.
2. National Ease the communication
Delivery Gateway and data exchange across
the departments in different
locations by providing a
standard-based messaging
switch.
3. Common Create tele-centers in local
Service Centers communities, providing
services as: application
forms, certificates, and
utility bill payments.
4. e-Procurement Simplify government
procurement in order
to be transparent and
result-oriented, including
indent of tender to tender
preparation, bidding, bid
evaluation and award of
contract.
32 5. e-Courts Streamline administration
activities.
Online availability of
judgments and cause
list, email notifications to
litigants.
6. India Portal Provide a single access
point to information and
services regarding the
Indian government at all
levels.
7. Electronic Simplify clearance
Data Interchange of export/ import of
for Trade cargo procedures,
increase transparency
in procedures, and
international standards,
and reduce transaction
cost and time, by, for
example, the payment of
custom duties online.
Source: National e-Governance Plan, available at http://www.mit.gov.in/content/mission-mode-projects.
CENTRAL PROJECT
Project Objective
1. Income Tax Provide tax services
to citizen online as
tax accounting and
compliance.
2. MCA21 Enable easy and secure
(Ministry of access to Ministry
Corporate of Corporate Affairs
Affairs21) services as registration of
companies.
3. Insurance Issue policies on the Web.
Automate grievance
reporting.
Create a database of
insurance users.
4. Central Excise Simplify customs and
& Custom excise processes as
registration, returns,
revenue reconciliation to
ease exports.
5. National Create a central database
Citizen of residents. Each resident
Database is assigned a unique
identification number to
provide social and welfare
services efficiently.
6. Pensions Provide updated
information on pension
issues and enable citizens
to register complaints on
pension issues, tracking
the progresses of their
cases.
7. Banking Integrate core banking
solutions of various banks.
8. e-Office Improve the operational
efficiency of the
government offices
with less paperwork.
9. Passport Deliver passports
within 3 working days to
categories not requiring
police verification.
10. Immigration Facilitate legitimate
Visa and travelers procedures while
Foreigners strengthening security.
Registration &
Tracking
STATE PROJECT
Project Objective
1. Agriculture Provide information to
farmers on agricultural
topics such as
seeds, fertilizers, soil
recommendations, crop
management.
2. Employment Facilitate the match
Exchange between employers and
employee, creating an
employee database and
enabling online registration
of vacancies by employers.
3. Commercial Streamline VAT
Taxes administrative procedures
and shorten the timeline by
enabling electronic filing
of returns, clearance of
refunds, payment of taxes
and other services.
4. Land Records Enable submission of forms
and download of land
documents.
Facilitate an integrated
maintenance and updates
of land databases, to
reduce land dispute
litigation.
Support infrastructures and
environment development
planning.
5. Road Provide states with a
Transport data-sharing network for
faster and better-managed
vehicle registration
and driving licenses
procedures.
6. Gram Enable Gram Panchayat
Panchayat (local governments) to
issue trade licenses and
no-objection certificates,
certificates of birth
and death, income and
solvency, and provide
house services.
7. Municipalities Improve the efficiency and
effectiveness of municipal
service delivery.
Provide timely and reliable
management information
relating to municipal
administration.
8. Police Create crime-related
databases across
departments, to facilitate
cooperation, effective
personal management,
and efficient inventory
control.
9. e-District Back Common Services
Centres (CSCs) to provide
services to citizens.
10. Treasury Enable online payment
of government expenses
and transfer of accounting
information across
government levels.
 Using Information and Communication Technologies to Boost India’s Competitiveness
Figure 16: Individual usage in India

Mobile telephone
subscriptions*: 116

Internet access in schools: 67 Personal computers*: 93

109


Individual
4HYRL[
usage
,U]PYVUTLU[

Internet users*: 113 Broadband Internet

subscribers*: 96

*Quantitative data

Source: World Economic Forum, 2010.

Table 17: Government procurement of advanced ranked 116th in the world in 2008 for the number of
technology products: India and selected comparators, mobile subscribers per 100 population (29.4), last in 33
2008–2009 weighted average* the comparator sample (Table 18) and with fewer users
than Developing Asia (2.2) and China (47.9, 107th).The
Country/Economy Rank Score contrast with globally top ranked United Arab Emirates
Singapore 1 5.50 and Estonia, with 208.6 and 188.2 mobile subscribers,
United Arab Emirates 2 5.17 respectively, is staggering. It is important to note,
Luxembourg 3 4.90 however, that India is also far behind the 40 percent
United States 4 4.77
of the 133 economies covered by the NRI that have
Qatar 5 4.72
already reached universal mobile penetration.
Finland 6 4.68
Although 2007 was declared the “Year of
Taiwan, China 7 4.66
Broadband,” Internet penetration remained extremely
Denmark 8 4.63
low in 2008: with 4.4 users per 100 population, India
Malaysia 9 4.58
ranked last in the sample (Table 19), with almost four
Tunisia 10 4.57
Vietnam 11 4.48
times fewer users than Developing Asia (15.6) and 17
Oman 12 4.47
times fewer than the United States (74.0, 14th), the top-
China 13 4.43 ranked country in the comparator sample. The picture
Sweden 14 4.39 for broadband subscribers is equally discouraging, with
Korea, Rep. 15 4.38 0.4 subscribers per 100 population (96th) in 2008 as
Azerbaijan 16 4.34 compared with 23.5 (22nd) in the United States and 6.2
Portugal 17 4.34 (55th) in China.
Bahrain 18 4.33 Underdeveloped Internet use is also linked to the
Cyprus 19 4.30 limited availability and access to PCs for individuals. In
Iceland 20 4.29 2008, India had 3.2 PCs per 100 population (ranked
Indonesia 34 4.05 93rd), third to last in the comparator sample and ahead
Brazil 60 3.68 only of Indonesia (2.0, 101st) and Pakistan (0.5, 121st)
India 68 3.57 (Table 20). Important obstacles to a larger diffusion of
Pakistan 87 3.34 PCs are the scarce availability of locally manufactured
* Do government procurement decisions foster technology innovation in PCs and the high cost of imported ones.
your country? (1 = no, not at all; 7 = yes, extremely effectively)
Public or shared Internet facilities such as cybercafés
Source: World Economic Forum, Executive Opinion Survey 2008, 2009.
Note: Blue indicates comparators discussed in the text; black indicates in urban areas partially compensate for the lack of home
the top 20 economies in this variable, other than the comparators. use and access at work or school, and play an important
role in connecting more Indians to the Internet.
Using Information and Communication Technologies to Boost India’s Competitiveness

Table 18: Mobile telephone subscriptions per 100 Table 19: Internet users per 100 population: India and
population: India and selected comparators, 2008 selected comparators, 2008

Country/Economy Rank Value Country/Economy Rank Value

United Arab Emirates 1 208.65 Iceland 1 90.56

Estonia 2 188.20 Sweden 2 87.84
Bahrain 3 185.77 Netherlands 3 86.55
Hong Kong SAR 4 165.85 Denmark 4 83.89
Barbados 5 159.09 Finland 5 82.62
Italy 6 151.57 Norway 6 82.55
Lithuania 7 151.24 Luxembourg 7 80.53
Luxembourg 8 147.11 Switzerland 8 77.00
Saudi Arabia 9 142.85 Korea, Rep. 9 76.50
Russian Federation 10 141.11 United Kingdom 10 76.24
Portugal 11 139.64 Canada 11 75.43
Bulgaria 12 138.30 Japan 12 75.40
Singapore 13 138.15 Germany 13 75.33
Czech Republic 14 133.54 United States 14 74.00
Croatia 15 132.95 Barbados 15 73.67
Qatar 16 131.39 Singapore 16 73.02
Austria 17 129.73 New Zealand 17 72.03
Finland 18 128.76 Australia 18 71.98
Germany 19 128.27 Austria 19 71.21
Israel 20 127.38 Belgium 20 68.86
Malaysia 50 102.59 Malaysia 34 55.80
United States 72 86.79 Brazil 50 37.52
Vietnam 81 80.37 Vietnam 73 23.92
34 Brazil 82 78.47 China 77 22.28
Indonesia 97 61.83 Pakistan 97 10.45
Pakistan 104 49.74 Indonesia 103 7.92
China 107 47.95 India 113 4.38
India 116 29.36 Source: ITU, 2010.
Sources: ITU, 2010; national sources. Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators.
Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators.

Cybercafés in particular have become widespread in Business usage

India and provide a much needed access point for the
computers and the Internet for a large part of Indian
society. According to Haseloff, there were already 50,000
cybercafés throughout the country in 2004.38
Internet access in schools is assessed slightly more
positively at 67th, on a par with the Developing
Asia average, although much lower than in China,
where it is ranked 23rd. The use of technology in
the educational system is an important catalyst for
ICT infrastructure deployment according to Tallon
and Kraemer.39 India launched the Education and
Research Network (ERNET) in 1986 to provide
state-of-the-art infrastructure and services to academic
and research institutions via a mix of terrestrial and
satellite-based wide area networks. China launched a
similar network, the China Education and Research
Network (CERNET), in 1994 with a much larger global
connectivity than enjoyed by ERNET. International
capacity and traffic generated by ERNET in 2006 were
6.64 Mb/s and 20 GB/s, respectively, as compared with
800 Mb/s and 800 GB/s by CERNET.40
Businesses effectively integrating and using ICT in their
processes and operations improve their efficiency and
innovation potential, thus increasing their productivity.
The business usage pillar gauges the ability of the busi-
ness sector in a country to leverage new technologies
and generate innovation by measuring dimensions related
to technology absorption, the capacity for innovation
(including the number of utility patents per 100 popula-
tion, high-tech exports, and creative industry exports
as a percentage of total exports of these industries), and
the extent to which businesses use the Internet in their
daily transactions and operations, through a total of seven
indicators (see Figure 17).
The Indian business sector is characterized by a
strong prowess for networked readiness, as demonstrated
by the fact that it is the national stakeholder that most
strongly leverages new technologies, coming in at 26th
place. The country outperforms by a large margin
relevant comparators such as Pakistan (80th) and
Indonesia (47th), as well as the lower-middle-income
group and Developing Asia averages (3.97 vs. 2.89 and
 Using Information and Communication Technologies to Boost India’s Competitiveness
Table 20: Personal computers per 100 population: India 3.27, respectively). However, the Index highlights the
and selected comparators, 2008 or most recent year progress that must still be made in order to catch up
available with the global best performer the United States (1st,
with a score of 6.10) or even China (16th, with a score
Country/Economy Rank Value of 4.73).
Switzerland 1 97.60 Looking at the various dimensions that make
Canada 2 94.40 up the pillar, Indian businesses appear to be fairly
Netherlands 3 90.91 successful in absorbing new technologies (30th)—
Sweden 4 87.79
mainly through foreign technology licensing, but also
Taiwan, China 5 83.47
in generating innovation by conducting formal research
United Kingdom 6 80.23
and pioneering their own new products and processes
United States 7 78.67
(35th). The industry in India has extensively leveraged
Singapore 8 76.04
imported technology and technical collaboration
Bahrain 9 74.58
agreements, while also proving capable of developing a
Hong Kong SAR 10 69.25
Saudi Arabia 11 68.25
certain amount of innovation. A recent trend has been
Luxembourg 12 67.73
the development of technologies and products targeted
Germany 13 65.54 at addressing the conditions of scarcity and diversity
France 14 65.17 that confront the Indian market, meeting the needs of
Norway 15 62.68 the consumers at the bottom of the pyramid. Box 6, by
Austria 16 60.69 Navi Radjou and Jaideep Prabhu of the Judge Business
Slovak Republic 17 58.15 School, University of Cambridge, provides a compelling
Korea, Rep. 18 58.14 account of this type of “indovation.”
Ireland 19 58.07 At the same time, the picture is more nuanced and
Japan 20 57.40 shows a large margin of improvement when it comes to
Brazil 50 16.12 endogenous innovation.
Vietnam 64 9.54 It is true that India posts one of its best showings in
China 83 5.61 relative terms for exports of creative industries products 35
India 93 3.18 as a share of the world total in such exports, where it
Indonesia 101 2.03 ranks 10th. But this still represented a share of only 3.3
Pakistan 121 0.55
in 2006, which compares fairly poorly with the 18.2
Sources: ITU, 2010; national sources. percent share of China, the global top performer in this
Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators.
indicator. Also for high-tech exports as a percentage of
goods exports, India is at a rather disappointing 50th

Figure 17: Business usage in India

Prevalence of foreign
technology licensing: 31

Firm-level technology
High-tech exports*: 50
absorption: 30

Utility patents*: 58 Capacity for innovation: 35

26


Business
4HYRL[
Creative industries Extent of business
exports*: 10
usage
,U]PYVUTLU[ Internet use: 43

*Quantitative data

Source: World Economic Forum, 2010.

Using Information and Communication Technologies to Boost India’s Competitiveness
Box 6: Indovations: How information and communication technologies can power affordable and
sustainable innovation
NAVI RADJOU and JAIDEEP PRABHU, Judge Business School, University of Cambridge
Innovate: Change something established by introducing
new methods, ideas or products—derivative:
“innovation”
— Oxford English Dictionary
Indovation: The unique process by which innovations
are developed in India to serve a large number of people
affordably and sustainably in response to conditions of
scarcity and diversity
— Wikipedia
The world is grappling with a period of dramatic change.
The aftershocks of recession, combined with the growing
scarcity of resources, have made customers worldwide
at once more frugal and more ecologically aware. These
demanding customers—empowered by social computing
technologies such as blogs, wikis, and Facebook—are forc-
ing enterprises to radically rethink their innovation strate-
gies and business models. Business executives are being
compelled to develop new value propositions that appeal
to these parsimonious and environmentally conscious
customers globally. In particular, firms are being forced to
learn new ways to generate more value for less cost for
36 more people—be they customers or citizens—in the face
of rapidly aging demographics and the growing scarcity of
natural and financial resources.1
To effectively deliver this new value proposition, com-
panies need to drastically reinvent their products, services,
processes, and business models by embracing a radically
different approach that encapsulates frugality, inclusive-
ness, sustainability, and collaboration. Regrettably, current
research and development (R&D), innovation strategies,
and business models are not much help because they are
primarily structured to help design, produce, and com-
mercialize products and services for affluent markets—and
presuppose the permanent availability of abundant financial
and natural resources. We believe that India provides a
great source of inspiration for driving affordable and sus-
tainable business innovation enabled by open, collaborative
partnerships.
Why India? The country is already a microcosm of the
world of scarcity, diversity, liberty, and connectivity that will
be the future of all nations. In effect, more than any other
country in the world, India—with a population of about
1.2 billion, which keeps growing at a rate of 1.5 percent a
year—faces scarcity on a grand scale across the board:
from water and food to oil and gas to primary education and
basic healthcare. Because of its inherent environmental
and social constraints, India is a place where the need to
get more value for less cost has been felt for a long while
now—and this need is often a matter of sheer survival.
Increasingly, this scarcity has combined with India’s mind-
boggling diversity (of religions, languages, and cultures),
its relative liberty (India is the world’s largest democracy
with a rapidly expanding free market economy) and growing
connectivity (India is adding 10–15 million mobile phone
subscribers each month) to turn it into a large-scale, living
laboratory where a large number of social entrepreneurs
and for-profit corporations are coming up with inventions—
or indovations—that are both affordable and sustainable.
These indovations have relevance not only within the
Indian context, but also in other global markets.
Interestingly, many such indovations leverage the
power of information and communication technologies
(ICT)—especially mobile connectivity, given the fact that
India is home to 670 million mobile phone subscribers—to
deliver more value at less cost for more people. Unlike in
the West, where ICT applications are typically first adopted
by businesses before entering the consumer domain, many
ICT solutions developed in India are squarely aimed at the
masses. Here are five ICT-enabled indovations imple-
mented across different sectors:
• Nokia Ovi Life Tools. Developed by Nokia, Ovi
Life Tools harnesses SMS technology to deliver
localized and timely information to farmers in
their native language on weather conditions,
advice about crop cycles, market prices for
crops, and seeds and fertilizers, in addition
to general farming tips and techniques. The
subscription price for this service is just 60
rupees (US$1.25) a month. Farmers, who make
up 60 percent of India’s population, report feeling
empowered by Ovi Life Tools, which already
boasts 1.5 million subscribers in India. After its
strong success in India, Nokia is now deploying
Ovi Life Tools in Indonesia and China.
• YES Bank’s mobile payment solution. Because
more than 600 million Indians remain unbanked,
the Indian government is encouraging banks to
leverage ICT to accelerate financial inclusion
on a large scale. Heeding this socioeconomic
mandate, YES Bank has partnered with Nokia
and Obopay, a mobile payment platform provider,
to deliver mobile banking services to even the
remotest areas of India. YES Bank’s solution
allows semi-urban and rural Indians to use their
mobile phones to send, save, and spend money
throughout the country safely, reliably, and
cost-effectively—without even having a bank
account.
• Everonn’s online education network. Everonn
operates the world’s largest education network
based on VSAT (very small aperture terminal)
satellite technology. Its VSAT-enabled virtual
and interactive classrooms deliver high-quality
content to hundreds of thousands of students
of all ages all across India. Everonn’s broad
educational services range from making toddlers
school-ready to boosting college students’
employability. It currently serves 1,567 institu-
tions, many of which are located in Tier II and
Tier III cities where teacher absenteeism is high.
Everonn is now offering educational content via
mobile phones too.
• GE Healthcare’s Vscan. Vscan is a portable,
battery-operated, cardiac ultrasound machine
developed by GE Healthcare based on extensive

market research conducted with physicians in
rural India who needed easy-to-use medical
devices. Vscan looks and feels like a mobile
phone, with a user interface that is as intuitive
as an iPod’s. By simply connecting the Vscan to
an Internet-enabled computer or even a mobile
phone, images captured by a technician in a
far-flung Indian village can instantaneously be
transmitted to a doctor in a distant city for analysis
and diagnosis.
• Tata Consultancy Services’ cloud computing–
based software for SMEs. Tata Consultancy
Services (TCS), India’s largest software exporter,
is now offering Indian small- and medium-sized
enterprises (SMEs) affordable software solutions
based on cloud computing. Cloud computing is
“an Internet-based technology through which
information is stored in servers and provided
as an on-demand service to clients.”2 By replac-
ing a traditional licensing model with a monthly
Using Information and Communication Technologies to Boost India’s Competitiveness
subscription, TCS’s cloud computing services
can lower SMEs’ total cost of ownership by
40 percent, allowing them to boost their produc-
tivity and competitiveness without breaking the
bank. After first deploying this offering in India,
TCS plans to expand it to overseas markets later.
The examples listed above clearly demonstrate how
ICT-enabled indovations can deliver better healthcare,
education, and financial services to a very large number
of people at extremely affordable prices.3 We believe
these affordable and sustainable ICT solutions are useful
and relevant not only in the Indian context but also across
many other global markets characterized by conditions of
scarcity as well as diversity, liberty, and connectivity.
Notes
1 See Prahalad and Mashelkar 2010.
2 Etro 2009, p. 107.
3 For more examples of ICT-enabled indovations, please visit
www.indovation.net.

Table 21: Number of utility patents (i.e., patents for place with 3.3 percent in 2007, way below global best
invention) granted between January 1 and December performer Hong Kong (44.8 percent) and China (27.6
31, 2008, per million population: India and selected percent, ranked 8th). India is also exporting much less
comparators, 2008 than the Developing Asia average (10.6 percent). As 37
already discussed, one of the most remarkable features of
Country/Economy Rank Value
India’s recent development history is that it has been led
Taiwan, China 1 279.25 by services rather than manufacturing. Taking advantage
Japan 2 263.35 of its large pool of qualified English-speaking workers,
United States 3 250.93
India has affirmed itself as a global player in services such
Israel 4 166.57
as the already-mentioned ITeS-BPO industry, and also
Korea, Rep. 5 155.97
in pharmaceuticals. Manufacturing has been relegated
Finland 6 155.47
to a secondary position also because of the country’s
Switzerland 7 148.27
infrastructure limitations.
Sweden 8 115.22
Germany 9 108.06
Finally, India ranks 58th for the number of utility
Canada 10 102.20
patents obtained per capita, corresponding to 0.5 patents
Singapore 11 88.67 per million population. Although this figure is in line
Iceland 12 85.81 with that of Brazil (0.5) and is better than a handful of
Netherlands 13 80.55 comparators, it pales in comparison with the 279.2 utility
Denmark 14 71.09 patents displayed by top performer Taiwan or the 250.9
Australia 15 61.52 (3rd) utility patents granted to US citizens (see Table 21).
Norway 16 58.09 In order to boost India’s innovation capacity, R&D
Austria 17 55.12 spending should be significantly expanded, especially
France 18 51.10 by the private sector. In 2004, the country’s total R&D
Luxembourg 19 50.85 amounted to 0.7 percent of GDP, quite low when
United Kingdom 20 50.72 compared with that of China (1.4 percent), the United
Malaysia 29 5.63 States (2.6 percent), and especially Japan (3.3 percent).41
China 50 0.92 At the same time, India’s share of global R&D spending
India 58 0.53 was equivalent to 2 percent as opposed to 9.5 percent,
Brazil 59 0.52
13.5 percent, and 34.3 percent in China, Japan, and the
Indonesia 87 0.02
United States, respectively. Moreover, 75 percent of R&D
Pakistan 88 0.02
spending in India is carried out by the public sector, in
Vietnam 90 0.00
contrast to countries such as China, Malaysia, and most
Source: The United States Patent and Trademark Office, June 2009. OECD countries, where the private sector is the main
Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators.
research engine and accounts for up to 70 percent of
total R&D spending.
Using Information and Communication Technologies to Boost India’s Competitiveness
Figure 18: Government usage in India
Government success
in ICT promotion: 22
E-Participation Index*: 55
48

Government
4HYRL[
usage
,U]PYVUTLU[
Presence of ICT in
government agencies: 66
*Quantitative data
Source: World Economic Forum, 2010.
The government is well aware of the importance of
38 R&D for enhancing national innovation output: in 2008
in his address to the Indian Science Congress, Prime
Minister Singh announced that total spending on R&D
would be brought to 2 percent of GDP by the end of the
11th Five-Year Plan in 2012.
Government usage
ICT can play a key role in cutting red tape and increasing
government efficiency and transparency. It can also
enable better access and quality of services for citizens as
well as enhanced participation. The government usage
pillar, composed of five indicators, gauges the extent to
which the government uses new technologies to improve
its efficiency and has been successful in improving ICT
penetration in society at large, together with the quality
and availability of e-services and e-participation
(Figure 18).
India ranks 48th for the ICT usage of its govern-
ment, clustering with Brazil (45th) and outperforming
comparators Vietnam (68th), Indonesia (86th), and
Pakistan (91st), as well as the lower-middle income group
and Developing Asia averages (3.95 vs. 3.37 and 3.52,
respectively).
At the same time, the government does not leverage
ICT as fully as sample best performer United States (4th)
or Malaysia (12th). China also once again surpasses India
for the usage of ICT by its government (30th).
The Indian government is perceived as fairly
successful in promoting the use of ICT in the country
(22nd), on a par with the United States (20th) and
more successful than the OECD average (5.17 vs. 4.59).
Government Online
Service Index*: 53
ICT use and government
efficiency: 38
This rather upbeat assessment no doubt reflects the
important role the government has played in liberalizing
the telecommunications sector. This has been crucial
for bringing about the ensuing important increase
in telephony and Internet penetration. However, this
achievement should not obscure the important challenges
yet to be addressed in terms of further connecting the
country and ensuring ICT access for all, as highlighted in
the individual usage discussion.
Similarly, the government is perceived to be using
ICT effectively in its operations and to have significantly
improved its provision of services as a consequence
(38th). However, ICT is not used as widely as it could be
in government agencies, an area that represents the worst
showing within the pillar at 66th, well below the United
States (15th) and China (23rd).
Finally, India ranks 53rd in the UN Government
Online Service Index, which assesses the quality of
government’s delivery of online services. This compares
well with the situation in China and Brazil but is far
behind the United States (2nd) and Malaysia (16th), the
comparator sample’s top-ranked countries (see Table 22).
The huge potential of ICT does not yet seem
to have been totally exploited by the government
in improving its provision of services to citizens. At
the same time, the government has a clear vision for
increasingly leveraging ICT for improved efficiency and
better service provision and has made important strides
in this direction, notably with the adoption of the NeGP
discussed above. Efforts need to be mobilized to ensure
the timely and successful implementation of this vision.
Box 7, authored by Soumitra Dutta of INSEAD, delves

Box 7: The multipurpose national identity card
SOUMITRA DUTTA, INSEAD
Every tourist who has traveled in India marvels at the
diverse mix of transportation vehicles in the clogged roads
of a typical Indian city. Pedestrians, cyclists, scooters,
motorcycles, cars, trucks, buses—and do not forget ani-
mals and bullock carts—all seem to cohabit the same road
in a mysteriously harmonious manner. Indeed, one unique
characteristic of India seems to be its ability to create and
sustain diversity, be it in religion, culture, food, or dress.
So it should not be a surprise to note that India never had
a unique identification number for its citizens. A range of
different identification cards existed across the country.
Each department or agency of the government adopted its
own system of identification: the PAN card, the ration card,
the passport, and the Electoral Photo Identity Card, among
others. Such specific-purpose identities rendered it impos-
sible to correlate information across institutions to provide
better services to people. Similarly, different agencies of
government were unable to correlate their data relating to
any particular individual. The deficiencies of this lack of
unity became glaringly obvious in the wake of the terrorist
attack in Mumbai in 2008.
Hence the creation of a national unique identifier—a
UID number (or Aadhar as it is locally called, standing
for “foundation”)—for every Indian citizen has taken on
strategic significance. The government has created a
special body, the Unique Identity Authority, to implement the
project under the leadership of one of the country’s most
illustrious entrepreneurs, Nandan Nilekani, the co-founder
and ex-CEO and Chairman of Infosys. The UID number will
be assigned to all voters by building on current electoral
roll data and progressively adding other people, including
people below 18 years of age who are not yet a part of the
country’s voters list. Over a period of time, through failsafe
procedures backed by intensive use of technology and with
the help of multiple government agencies, the accuracy and
comprehensiveness of the database will be improved. It is
further expected that usage of the UID will be progressively
extended to private-sector agencies in banking, financial
services, mobile telephony, and other such areas. Over a
period of time, the UID is expected to become the single
universal identification mechanism in the country, spanning
all institutions of the government and the private sector.1
According to a government press release, the UID offers
many benefits:
First and foremost, it would obviate the need
for a person to produce multiple documentary
proofs of his identity for availing of any govern-
ment service, or private services like opening of
a bank account, etc. This would end needless
harassment that people face for availing of basic
government services like issuance of passports,
driving licences, Electoral Identity Cards, etc.
Backed by intensive use of technology, it would
greatly facilitate easy verification of a person’s
identity and enable a single communication to
trigger address changes in all relevant agencies
records. It would also serve as the basis for many
e-governance services incorporating online
Using Information and Communication Technologies to Boost India’s Competitiveness
verification of a person’s identity. UID would
enable government to ensure that benefits under
various welfare programmes reach the intended
beneficiaries, prevent cornering of benefits by a
few people and minimize frauds. It would enable
financial institutions to exchange information
regarding defaulters and encourage responsible
borrower behaviour.2
The UID is also seen as a significant anti-poverty mea-
sure—one on which all major political parties agree. There
is widespread fraud in many of the anti-poverty schemes
currently underway across the country: experts estimate
this leakage to be as high around 60 percent for many
programs. It is believed that the successful implementa-
tion of the UID could bring this figure down to 10 percent,
a dramatic improvement in efficiency of implementation.
Large parts of India’s rural populations are eligible for pov-
erty reduction schemes such as the Below Poverty Line
(BPL) card. However, because of a lack of harmonization
of government records, migrants to cities from rural areas
typically lose their benefits from these schemes in their
new environments. Such problems would be obviated with
the UID. Another example would be banking for the poor.
With the UID, residents could easily verify their identity to 39
banks by using this number either in person or remotely,
using a mobile device. As a result, banks will be able to
provide branchless banking services to hard-to-reach
rural regions.
Creation of the UID scheme in a country of over a billion
people poses significant challenges along both technologi-
cal and institutional fronts. The underlying technology has
to be implemented successfully and the risks of fraud and
identify theft have to be minimized. New biometric iden-
tification mechanisms have to be deployed in a country
where large parts of the population are still illiterate. Work
processes have to be redesigned to benefit from the new
common identifier and to generate the necessary efficien-
cies. Levels of coordination and collaboration have to be
improved significantly—not only among different govern-
ment agencies, but also across the public and private
sectors. Modes of governance in key institutions need to
be rethought to reflect the new possibilities of the UID. It is
clear that the implementation of the technology of the UID
is a necessary but small first step. A lot of hard work lies
ahead in changing the overall context in which the UID is
utilized in the country.
There are also risks in the implementation of the UID
scheme. Migrants, refugees, and other stateless people
could be left in a limbo where they “disappear” from the
radar screen without a UID number. The strength of a
chain is always limited by its weakest link. Weak pro-
cesses in one institution could create a loophole for the
creation of fake identities and lead to fraudulent claims
and access to benefits reserved for low-income citizens.
When faced with the prospect of significant change and
increased transparency, institutions and individuals within
(Cont’d.)
Using Information and Communication Technologies to Boost India’s Competitiveness

(cont’d.) and Sonia Gandhi on September 29, 2010, in the Nandurbar

district of Maharashtra. The goal of the UID team is to
the power elite can also stop or slow down the implemen- enroll 100 million Indians by March 2011. There is much
tation of the UID scheme. Further, some have criticized more ground to cover. After all, there are about 1.2 billion
the UID initiative as a “national security project in the Indian citizens today, and we add around 15 million new
garb of a social policy initiative,”3 and raised questions citizens each year.
about potential violations of privacy and infringement of
personal liberties. Notes
The UID project team has made an impressive start over 1 GoI 2008.
the last 12 months. Following a small-smart-flat-fast (2S2F) 2 GoI 2008.
organization and execution model, the UID scheme was 3 Halarnkar 2010.
launched nationally by Prime Minister Manmohan Singh

Table 22: Government Online Service Index: India and Table 23: E-Participation Index: India and selected
selected comparators, 2009 comparators, 2009

Country/Economy Rank Score Country/Economy Rank Score

Korea, Rep. 1 1.00 Korea, Rep. 1 1.00

United States 2 0.94 Australia 2 0.91
Canada 3 0.88 Spain 3 0.83
United Kingdom 4 0.77 New Zealand 4 0.77
Australia 5 0.77 United Kingdom 4 0.77
Spain 5 0.77 Japan 6 0.76
Norway 7 0.74 United States 6 0.76
40 Bahrain 8 0.73 Canada 8 0.73
Colombia 9 0.71 Estonia 9 0.69
Singapore 10 0.69 Singapore 9 0.69
France 11 0.68 Bahrain 11 0.67
Netherlands 12 0.68 Malaysia 12 0.66
Denmark 13 0.67 Denmark 13 0.64
Japan 13 0.67 Germany 14 0.61
New Zealand 15 0.64 France 15 0.60
Malaysia 16 0.63 Netherlands 15 0.60
Belgium 17 0.63 Belgium 17 0.59
Chile 18 0.61 Kazakhstan 18 0.56
Israel 19 0.58 Lithuania 19 0.53
Mongolia 20 0.56 Slovenia 20 0.51
Brazil 53 0.37 China 32 0.37
China 53 0.37 Brazil 41 0.29
India 53 0.37 India 55 0.20
Vietnam 76 0.30 Pakistan 64 0.17
Pakistan 92 0.25 Indonesia 77 0.13
Indonesia 94 0.24 Vietnam 94 0.09

Source: United Nations, 2010. Source: United Nations, 2010.

Note: Blue indicates comparators discussed in the text; black indicates Note: Blue indicates comparators discussed in the text; black indicates
the top 20 economies in this variable, other than the comparators. the top 20 economies in this variable, other than the comparators.

into a recent e-initiative of the government to establish
Multipurpose National Identity cards, with important
implications for better access to services and improving
the efficiency of the public administration.
The assessment of India given by the UN
e-Participation Index is very similar to the one
discussed above for e-government services (see
Table 23). The e-Participation Index, which gauges
the quality, relevance, usefulness, and willingness of
government websites for providing online information
and participatory tools and services to citizens, ranks
the country 55th, better placed than Pakistan (64th),
Indonesia (77th), and Vietnam (94th). However, the
Index highlights a fair margin for improvement in
ICT use for better e-participation when compared
with the United States (6th), Malaysia (12th), and even
China (32nd).

Conclusion
With its large talent pool of English-speaking IT profes-
sionals, its extensive and expanding domestic market, and
the increasingly central place occupied by ICT in the
government’s development strategy, India is well posi-
tioned to leverage ICT moving forward. This will enable
the country to leapfrog to higher stages of development,
reduce poverty and regional income disparities, and
reinforce its competitiveness for enhanced growth and
prosperity.
The analysis conducted in this paper has underlined
the remarkable strides India has made in the last two
decades, emerging as a global player in sectors such
as ITeS-BPO and also by increasing ICT penetration
and diffusion within its territory. At the same time, the
challenges ahead, as well as the opportunities for better
exploiting India’s many competitive advantages when it
comes to networked readiness, have been highlighted
and discussed.
The analysis has shown that India still lags behind
relevant comparators, including China, in most of
the dimensions measured by the NRI. In particular,
notwithstanding the high level of individual preparation
for using ICT and fairly affordable access costs, individual
penetration remains extremely low by international
standards, with the majority of citizens not yet benefiting
from ICT advances in their daily activities and transactions.
The strong economic growth experienced by India
in the last 20 years has neither bridged the economic
and social divide between urban and rural areas nor
significantly reduced extreme poverty. The country
still faces important development challenges in making
growth more inclusive. ICT could play an important
enabling role in that area by improving all citizens’ access
to markets as well as to basic services in education, health,
and financial services, among others. Although much has
been achieved, without increasing ICT penetration the
enormous opportunities it offers will continue to elude a
substantial segment of the population.
A significant impediment to increasing penetration
is the dismal quality and underdevelopment of national
hard infrastructure, including energy and transport
networks as well as fixed telephony. This not only
undermines widespread ICT use but stands in the way of
productivity increases and manufacturing development
and deters foreign investors.
In parallel, despite the major market reforms that
dismantled the license raj system in the 1990s, the
regulatory environment for doing business must be
improved by further cutting red tape and government
inefficiencies as well as enhancing public governance.
Such improvements would result in a more favorable
and predictable regulatory and market environment for
both foreign and domestic investment. In particular,
additional foreign investment could engender significant
positive externalities in terms of job creation, technology
development, and management skills, among other
elements.
Using Information and Communication Technologies to Boost India’s Competitiveness
On a more positive note, ICT, both as a target
sector and an enabling infrastructure for enhanced
efficiency and better living conditions, has increasingly
been prioritized by the government over the last 20
years. A comprehensive long-term plan, the NeGP was
adopted in 1996, embracing almost all sectors, and to be
implemented at integrated, central, and state levels. The
government’s coherent vision of the importance of ICT
bodes well for fully leveraging the country’s enormous
potential going forward, turning ICT into a key catalyst
of India’s development and societal inclusion. The
government’s vision needs, of course, to be matched by a
concomitant commitment and effort on the part of the
business sector and civil society at large, as the experience
of the most successful networked economies has shown.
This paper intends to provide a useful basis for a
society-wide discussion on how to further improve ICT
diffusion and development in India in order to take
advantage of the opportunities presented by the country’s
several advantages in this realm. By offering a snapshot
of the country’s networked readiness and by drawing
comparisons with economies with similar characteristics
and challenges, the paper aims to cast light on the
weaknesses that should be addressed on a priority basis
and point to possible solutions and best practices that
would make India a truly networked society.
41
Notes
1 India has the 11th largest GDP when measured at market exchange
rates.
2 See http://hdr.undp.org/en/statistics/.
3 Data from the World Bank’s World Development Indicators database
(retrieved on August 4, 2010).
4 See World Economic Forum 2009.
5 For instance, companies that exported all of their software products
have been exempted from income tax, and restrictions on computer
imports have been relaxed. Moreover, software firms have been
supported in their financing requirements through favorable loans,
specialized bank desks, and venture capital investment funds.
6 Domestic demand for IT has recently become increasingly important,
driven by the banking, financial services and insurance sector,
manufacturing, railways, telecommunications, and the government.
The total size of IT domestic demand (including hardware, software,
and ITeS-BPO) grew by 29 percent in 2005–06 and accounted for
US$16 billion in 2006–07. See OECD 2010.
7 Kaka 2009. The reasons for India’s success in ITeS-BPO can be
traced back to the country’s highly educated English-speaking
workforce, labor costs that are low by international standards, and
excellent international data communications links. Deregulation and
FDI opening were also critical in developing the sector, by attracting
foreign multinationals eager to enter the large Indian markets and
leverage such competitive advantages.
8 OECD 2010.
9 ITU 2010.
10 If the framework has not changed since 2002, the actual variables
populating it have experienced some variation over time. On one
hand, the dynamism of the technology landscape requires the NRI
composition to be periodically updated to remain a relevant measure
of networked readiness. Also, time-sensitive variables that have not
been recently updated by relevant international institutions have
sometimes been dropped. On a related note, changes in the data
computation methodology of international data providers are reflected
in the NRI composition. For instance, the NRI 2009–2010 replaced
the indicators capturing high-speed monthly subscription, lowest
cost of broadband, and cost of mobile telephone calls, which were
discontinued by ITU, with the organization’s new purchasing power
parity (PPP)-adjusted fixed broadband, mobile cellular, and fixed
telephone lines tariffs. See Dutta et al. 2010 for more details.
11 See EFQM at http://ww1.efqm.org/en/Home/aboutEFQM/Ourmodels/
TheEFQMExcellenceModel/tabid/170/Default.aspx.
Using Information and Communication Technologies to Boost India’s Competitiveness
12 See Dutta et al. 2010.
13 OECD 2010.
14 A number of studies have demonstrated in particular the positive
impact of mobile penetration on economic growth and development.
Mobile telephony affects economic growth in a variety of ways,
notably by improving market and business efficiency (in particular
through better access to goods markets and information); facilitating
access to financial services, especially for the poorest segment
of the population (conspicuously through mobile banking and
payments); creating jobs; and ensuring a more efficient provision of
health care services, among others. For a full review of the literature
see Waverman and Dasgupta 2009.
15 OECD 2010.
16 Quoted in Einhorn 2007.
17 The decile ranking approach attributes ranks based on scores while
taking into account the changing number of countries in the sample
from 2001 to 2009. For each edition of the NRI, the overall ranking
was divided into 10 segments called deciles, each with an equal
count of ranks.
18 Regional comparators included are China, India, Indonesia, Malaysia,
Vietnam, and Pakistan as well as the Developing Asia average. In
addition, other comparators were selected from outside the region,
notably Brazil, the United States, and the OECD average since these
countries/regions either share features similar to India (namely Brazil)
or demonstrate elements of interest in their ICT landscape and
strategies.
19 The World Bank’s classification of countries based on GNI (US$)
per capita has been used to classify countries by income group.
The four groups are: low-income countries (under US$976), lower-
middle-income countries (between US$976 and 3,855), upper-middle-
income countries (between US$3,856 and 11,905), and high-income
countries (above US$11,905).
20 The differences in score between India and the selected comparators
in the nine pillars are less pronounced than the ones in rank. This
reflects the fact that ranks can vary very much on the basis of minor
score differences because of the large number of countries included
in the global rankings.
42 21 ICT clusters are concentrated in Bangalore, Hyderabad, and Chennai
in the south, Kolkata in the northeast, Gurgao in the north, and
Mumbai and Pune in the center. Clusters are also being developed in
cities such as Ahmedabad, Bhubhaneswar, Chandigarh, Coimbatore,
Jaipur, Kochi, Madurai, Mangalore, Mysore, and Trivandrum. See
OECD 2010.
22 See OECD 2010 for more details on ICT clusters and public policies
adopted in India to promote the IT sector.
23 Although it should be noted that the tax system is not perceived as
highly distortive (29th) by the Survey respondents.
24 For a full account of India’s telecommunications liberalization, see
Tanguturi and Harmantzis 2008.
25 The text of the Act can be found at http://unpan1.un.org/intradoc/
groups/public/documents/APCITY/UNPAN010239.pdf. The Act
was controversially amended in 2008 to allow the government to
intercept, monitor, or decrypt “electronic” information in the interest
of national sovereignty, integrity and defence, among others.
26 See World Economic Forum 2009.
27 OECD 2007.
28 World Economic Forum 2009.
29 OECD 2010.
30 IIT Bombay and IIT Delhi ranked 36th and 42nd, respectively, in the
Higher Education’s 2008 Top 100 of Engineering and Innovation
Technology Universities of The Times.
31 The IISs ranked first among Indian universities in Shanghai Jiao Tong
University’s 2008 Academic Ranking of World Universities.
32 OECD 2010.
33 NASSCOM’s Strategic Review 2008.
34 OECD 2010.
35 India boasts excellent business schools, producing world-class
students. Among those, one can cite the Indian Institutes of
Management (IIMs) in Ahmedabad, Bangalore, Calcutta, and the
Xavier Labour Research Institute (XLRI) in Jamshedpur. The IIMs
have historically boasted the highest number of students who
become entrepreneurs in their professional lives.
36 See http://india.gov.in/govt/national_egov_plan.php.
37 This infrastructure includes a State Wide Area Network (SWAN)
to create a secure government closed wired network (along with
the creation of a wide digital database of information such as land
ownership, tax payments, foreigners’ registration, and citizens’
identification); State Data Centers to provide secure data storage,
Internet portals, and service integration; and Common Service
Centers (i.e., kiosk offices in rural villages connected with the
government network that is entitled to deliver services to the citizens
on a local basis). The Common Service Centers are to be managed as
public-private partnerships, with local private entrepreneurs to run the
kiosks for a small fee for the services provided.
38 Haseloff 2005.
39 Tallon and Kraemer 1999.
40 Tanguturi and Harmantzis 2008.
41 R&D Magazine 2008.
References
Aggarwal, A. 2005. “Performance of Export Processing Zones: A
Comparative Analysis of India, Sri Lanka and Bangladesh.” New
Delhi Working Papers 155. New Delhi: Indian Council of Research on
International Economic Relations.
Arora, A. and A. Gabardella. 2006. From Underdogs to Tigers: The Rise
and Growth of the Software Industry in Brazil, China, India, Ireland and
Israel. Oxford: Oxford University Press.
Browne, C. and T. Geiger. 2009. “The Executive Opinion Survey:
Capturing the View of the Business Community.” The Global
Competitiveness Report 2009–2010. Geneva: World Economic Forum.
49–57.
Chauhan, R. 2009. National E-Governance Plan in India. May. UNU-IIST
Report No. 414. Macao: UNU-IIST.
CLSA Indian Education Industry Survey. Available at http://www.scribd.
com/doc/5324806/CLSA-Indian-Education-Industry-Survey.
Daga, V., N. Manuel, and L. Narasimhan. 2010. “Riding Asia’s Digital
Tiger.” September. McKinsey Quarterly. Available at http://www.
mckinseyquarterly.com.
Dutta, S., I. Mia, T. Geiger, and E. Trujillo Herrera. 2010. “How Networked
Is the World? Insights from the Networked Readiness Index 2009–2010.”
The Global Information Technology Report 2009–2010. Geneva: World
Economic Forum. 3–30.
Einhorn, B. 2007. “Why India’s Internet Connections Are Falling.”
Bloomberg Businessweek. October 8. Available at:http://www.
businessweek.com/globalbiz/blog/eyeonasia/archives/2007/10/why_
indias_internet_connections_are_falling.html.
Etro, F. 2009. “The Economic Consequences of the Diffusion of Cloud
Computing.” The Global Information and Technology Report 2009–2010.
Geneva: World Economic Forum. 107–12.
GoI (Government of India), Press Information Bureau. 2008.
“Government Approves Issue of Unique Identity (UID) Number to All
Residents.” November 10. Available at http://pib.nic.in/release/release.
asp?relid=44711.
GoI (Government of India), Department of Information Technology. 2009.
Annual Report. New Delhi: Ministry of Communications & Information
Technology, Government of India.
Halarnkar, S. 2010. “Nandan Nilekani’s New Deal.” Hindustan Times
September 22. Available at http://www.hindustantimes.com/News-Feed/
samar/Nandan-Nilekani-s-new-deal/Article1-603455.aspx.
Haseloff, A. M. 2005. “Cybercafes and their Potential as Community
Development Tools in India.” The Journal of Community Informatics 1 (3).
IMF (International Monetary Fund). 2010. World Economic Outlook
Database. April. Washington, DC: IMF.
ITU (International Telecommunication Union). 2010, World
Telecommunication/ICT Indicators Database 2010. Available at http://
www.itu.int/ITU-D/ict/publications/world/world.html.
Ivaturi, V., B. Lanvin, and H. Mohan. 2008. “Global Mobility of Talents:
What Will Make People Move, Stay, or Leave in 2015 and Beyond?”
The Global Information Technology Report 2008–2009. World Economic
Forum: Geneva. 81–94.
Kaka, N. 2009. “Strengthening India’s Offshoring Industry.” September.
Available at http://www.mckinseyquarterly.com.
 Using Information and Communication Technologies to Boost India’s Competitiveness
OECD (Organisation for Economic Co-operation and Development).
2007. 2007 OECD Economic Survey of India. October. Paris: OECD.

———. 2009. India: Investment Policy Reviews. December. Paris: OECD.

———. 2010. “The Information and Communication Technology Sector

in India: Performance, Growth and Key Challenges.” April. DSTI/ICCP/
IE(2008)7/FINAL. Paris: OECD.

Prahalad, C. K. and R. A. Mashelkar. 2010. “Innovation’s Holy Grail.”

Harvard Business Review, July-August.

Qiang, C. Z.-W. and C. Rosotto, with K. Kimura. 2009. “Economic

Impacts of Broadband.” Information and Communications for
Development 2009: Extending Reach and Increasing Impact.
Washington, DC: World Bank 35–50.

Samarajiva R. and A. Zainudeen. 2008. “ICT Infrastructure in Emerging

Asia Policy and Regulatory Roadblocks.” International Development
Centre and SAGE. New Dheli: SAGE Publications India Pvt Ltd.

Tallon P. P. and K. L. Kraemer. 1999. “The Impact of Technology on

Ireland’s Economic Growth and Development: Lessons for Developing
Countries.” Proceedings of the 32nd Annual Hawaii International
Conference on System Sciences, Volume 7. Maui, January 5–8.

Tanguturi V. P. and F. C. Harmantzis. 2008. “ICT Infrastructure in Two

Asian Giants: A Comparative Analysis of China and India.” January 10th.
Available at SSRN: http://ssrn.com/abstract=1085928Available at SSRN:
http://ssrn.com/abstract=1085928.

United Nations’ Millennium Development Goals. Available at http://www.

un.org/millenniumgoals/index.shtml.

United Nations. 2010. UN e-Government Survey 2010: Leveraging

e-Government at a Time of Financial and Economic Crisis. Available at
http://www.unpan.org/egovkb/global_reports/08report.htm.

US Department of Commerce and NTIA (National Telecommunication 43

and Information Administration). 1995. Falling through the Net: A Survey
of “Have Nots” in Rural and Urban America. Washington, DC: NTIA.
Available at http://www.ntia.doc.gov/ntiahome/fallingthru.html.

Wadhva, C. D. 2004. “India Trying to Liberalize: Economic Reforms since

1991.” In The Asia-Pacific: A Region in Transition, ed. J. Rolfe. Honolulu:
Asia Pacific Center for Security Studies. 259–87.

Waverman L. and K. Dasgupta. 2009. “How to Maximize the Economic

Impact of Mobile Communications: The Four Waves.” The Global
Information Technology Report 2008–2009. Geneva: World Economic
Forum. 53–62.

World Bank.2010. India: Economic Update. June. Washington, DC: The

World Bank.

World Economic Forum. 2009. The India Competitiveness Review 2009.

Geneva: World Economic Forum. 2009.

———. 2010. The Global Information and Technology Report 2009–2010.

Geneva: World Economic Forum.

Appendix 1: Composition and computation of the Networked Readiness Index 2009–2010
This appendix presents the structure of the Networked
Readiness Index (NRI) 2009–2010.The NRI separates
environmental factors from ICT readiness and usage,
and is composed of three subindexes. Each subindex is
divided into three pillars. The 68 variables (or indicators)
used in the computation of the NRI are then distributed
among the nine pillars.a The numbering of the vari-
ables matches the numbering of the Data Tables found
at the end of The Global Information Technology Report
2009–2010. The number preceding the period indicates
to which pillar the variable belongs (e.g., variable 1.01
belongs to the first pillar; variable 9.02 belongs to the
ninth pillar). The quantitative indicators used in the NRI
are normalized on a 1-to-7 scale in order to align them
with the Executive Opinion Survey’s results.b
NETWORKED READINESS INDEX
Networked Readiness
Index = 1/3 Environment subindex
+ 1/3 Readiness subindex
+ 1/3 Usage subindex
Environment subindex
Environment subindex = 1/3 Market environment
+ 1/3 Political and regulatory environment
+ 1/3 Infrastructure environment
1st pillar: Market environment
1.01 Venture capital availability
1.02 Financial market sophistication
1.03 Availability of latest technologies
1.04 State of cluster development
1.05 Burden of government regulation
1.06 Extent and effect of taxationc
1.07 Total tax rate (quantitative data)c
1.08 Time required to start a business (quantitative data)d
1.09 Number of procedures required to start a business
(quantitative data)d
1.10 Intensity of local competition
1.11 Freedom of the press
2nd pillar: Political and regulatory environment
2.01 Effectiveness of law-making bodies
2.02 Laws relating to ICT
2.03 Judicial independence
2.04 Intellectual property protection
2.05 Efficiency of legal framework in settling disputes
(quantitative data)e
2.06 Efficiency of legal framework in challenging regulations
(quantitative data)e
2.07 Property rights
2.08 Number of procedures to enforce a contract
(quantitative data)f
2.09 Time to enforce a contract (quantitative data)f
2.10 Level of competition index (quantitative data)
Using Information and Communication Technologies to Boost India’s Competitiveness
3rd pillar: Infrastructure environment
3.01 Number of telephone lines (quantitative data)
3.02 Secure Internet servers (quantitative data)
3.03 Electricity production (quantitative data)
3.04 Availability of scientists and engineers
3.05 Quality of scientific research institutions
3.06 Tertiary enrollment (quantitative data)
3.07 Education expenditure (quantitative data)
3.08 Accessibility of digital content
3.09 Internet bandwidth (quantitative data)
Readiness subindex
Readiness subindex = 1/3 Individual readiness
+ 1/3 Business readiness
+ 1/3 Government readiness
4th pillar: Individual readiness
4.01 Quality of math and science education
4.02 Quality of the educational system
4.03 Buyer sophistication
4.04 Residential telephone connection charge (quantitative data)g
4.05 Residential monthly telephone subscription
(quantitative data)g
4.06 Fixed broadband tariffs (quantitative data)
4.07 Mobile cellular tariffs (quantitative data)
4.08 Fixed telephone lines tariffs (quantitative data)
45
5th pillar: Business readiness
5.01 Extent of staff training
5.02 Local availability of specialized research and training
services
5.03 Quality of management schools
5.04 Company spending on R&D
5.05 University-industry collaboration in R&D
5.06 Business telephone connection charge (quantitative data)h
5.07 Business monthly telephone subscription (quantitative data)h
5.08 Local supplier quality
5.09 Computer, communications, and other services imports
(quantitative data)
5.10 Availability of new telephone lines
6th pillar: Government readiness
6.01 Government prioritization of ICT
6.02 Government procurement of advanced technology products
6.03 Importance of ICT to government vision of the future
Using Information and Communication Technologies to Boost India’s Competitiveness

Appendix 1: Composition and computation of the Networked Readiness Index 2009–2010 (cont’d)

Usage subindex
Usage subindex = 1/3 individual usage
+ 1/3 Business usage
+ 1/3 Government usage

7th pillar: Individual usage

7.01 Mobile telephone subscriptions (quantitative data)
7.02 Personal computers (quantitative data)
7.03 Broadband Internet subscribers (quantitative data)
7.04 Internet users (quantitative data)
7.05 Internet access in schools

8th pillar: Business usage

8.01 Prevalence of foreign technology licensing
8.02 Firm-level technology absorption
8.03 Capacity for innovation
8.04 Extent of business Internet use
8.05 Creative industries exports (quantitative data)
8.06 Utility patents (quantitative data)
8.07 High-tech exports (quantitative data)

9th pillar: Government usage

9.01 Government success in ICT promotion
46
9.02 Government Online Service Index (quantitative data)
9.03 ICT use and government efficiency
9.04 Presence of ICT in government agencies
9.05 E-Participation Index (quantitative data)

Notes
a The computation of the NRI is based on successive aggregations of
scores, from the variables level (i.e., the lowest level) to the overall
NRI score (i.e., the highest level). For example, the score a country
achieves in the 3rd pillar, Infrastructure environment, accounts for
one third of the Environment subindex. Similarly, the Usage subindex
accounts for one third of the overall NRI scores.
b The standard formula for converting quantitative data is the following:

( )
country score – sample minimum
6 x +1
sample maximum – sample minimum

The sample minimum and sample maximum are, respectively, the

lowest and highest country scores in the sample of countries covered
by the NRI. In some instances, adjustments were made to account
for extreme outliers. For those quantitative variables for which a
higher value indicates a worse outcome (e.g., total tax rate, time
to enforce a contract), we rely on a normalization formula that, in
addition to converting the series to a 1-to-7 scale, reverses it, so that
1 and 7 still correspond to the worst and best possible outcomes,
respectively:

( )
country score – sample minimum
–6 x +1
sample maximum – sample minimum

c Variables 1.06 and 1.07 combine to form one single variable.

d Variables 1.08 and 1.09 combine to form one single variable.
e Variables 2.05 and 2.06 combine to form one single variable.
f Variables 2.08 and 2.09 combine to form one single variable.
g Variables 4.04 and 4.05 combine to form one single variable.
h Variables 5.06 and 5.07 combine to form one single variable.
 Using Information and Communication Technologies to Boost India’s Competitiveness
Appendix 2: India’s Networked Readiness Profile

Dev. Asia United OECD

China average States average
  Indicator Rank Score Evolution   (score)   (score)   (score)   (score)   Best performer

2009–2010 edition vs.

 
  2008–2009 2007–2008  

  Overall NRI 2009–2010 43   4.09   4.31   3.62   5.46   4.75   5.65 | Sweden
s s

  I. Environment subindex 53   3.96 s s   3.85   3.52   5.41   4.85   5.85 | Sweden

  II. Readiness subindex 22   5.07 s s   5.10   4.33   5.29   4.79   5.94 | Singapore

  III. Usage subindex 64   3.25 t t   3.99   3.01   5.69   4.60   5.71 | Korea, Rep.
                                 

  1. Market environment 35   4.67 s s   4.13   4.11   5.32   4.85   5.69 | Hong Kong SAR

1.01 Venture capital availability 23 n 3.62 t t   3.22   2.94   4.17   3.36   4.61 | Hong Kong SAR
1.02 Financial market sophistication 32 n 5.31 t s   3.98   3.95   6.22   5.52   6.69 | Luxembourg
1.03 Availability of latest technologies 39 n 5.50 s s   4.33   4.57   6.58   5.91   6.77 | Iceland
1.04 State of cluster development 20 n 4.59 s s   4.71   3.93   5.45   4.32   5.47 | Japan
1.05 Burden of government regulation 95 n 2.88 t t   3.91   3.25   3.39   3.23   5.57 | Singapore
1.06 Extent and effect of taxation 29 n 4.20 t t   4.06   3.92   3.59   3.42   6.27 | Bahrain
1.07 Total tax rate (quantitative data) 116 n 64.70 t t   78.50   40.29   46.30   43.47   0.20 | Timor-Leste
1.08 Time required to start a business 88 n 30.00 = t   37.00   49.21   6.00   14.24   1.00 | New Zealand
(quantitative data)
1.09 Number of procedures required to start a 115 n 13.00 = =   14.00   10.21   6.00   5.79   1.00 | Multiple (2) 47
business (quantitative data)
1.10 Intensity of local competition 12 n 5.75 t t   5.75   4.87   5.91   5.47   6.24 | Germany
1.11 Freedom of the press 18 n 6.34 s s   4.08   4.81   6.18   6.03   6.94 | Denmark
                           

2. Political and regulatory environment 46 4.52 s s   4.52   3.91   5.40   5.15   6.33 | Singapore

2.01 Effectiveness of law-making bodies 24 n 4.64 s s   4.39   3.62   4.17   4.23   6.46 | Singapore
2.02 Laws relating to ICT 39 n 4.54 t t   4.24   3.61   5.54   4.97   5.96 | Singapore
2.03 Judicial independence 37 n 4.96 s t   3.95   3.80   5.34   5.24   6.74 | New Zealand
2.04 Intellectual property protection 61 n 3.65 t t   4.02   3.27   5.44   4.95   6.21 | Singapore
2.05 Efficiency of legal framework in settling 37 n 4.39 t t   4.11   3.68   4.60   4.45   6.26 | Singapore
disputes
2.06 Efficiency of legal framework in challenging 21 n 4.71 n/a n/a   3.88   3.61   4.33   4.32   5.75 | Sweden
regulations
2.07 Property rights 54 n 4.78 t t   5.25   4.12   5.53   5.51   6.55 | Switzerland
2.08 Number of procedures to enforce a contract 117 n 46.00 = t   34.00   41.07   32.00   31.52   20.00 | Ireland
(quantitative data)
2.09 Time to enforce a contract (quantitative data) 126 n 1,420.00 = n/a   406.00   817.43   300.00   509.42   150.00 | Singapore
2.10 Level of competition Index (quantitative data) 1 n 6.00 n/a n/a   4.00   4.62   6.00   5.61   6.00 | Multiple (58)
                             

3. Infrastructure environment 83 2.70 t t   2.89   2.54   5.51   4.55   6.04 | Sweden

3.01 Number of telephone lines (quantitative data) 106 n 3.21 t t   25.48   10.73   49.62   42.63   64.11 | Switzerland
3.02 Secure Internet servers (quantitative data) 98 n 1.28 s s   0.93   6.28   1,173.66   530.64   1,561.71 | Iceland
3.03 Electricity production (quantitative data) 103 n 645.87 s s   2,178.96   1,578.12   14,309.62   9,245.12   32,240.26 | Iceland
3.04 Availability of scientists and engineers 4 n 5.62 t t   4.61   4.05   5.60   4.88   6.01 | Finland
3.05 Quality of scientific research institutions 25 n 4.89 s t   4.43   3.61   6.18   5.01   6.19 | Switzerland
3.06 Tertiary education enrollment (quantitative 100 n 11.85 s s   22.89   17.13   81.68   63.27   94.67 | Korea, Rep.
data)
3.07 Education expenditure (quantitative data) 94 n 3.23 t t   1.80   3.33   4.79   5.02   11.00 | Timor-Leste
3.08 Accessibility of digital content 84 n 4.50 t t   5.53   4.40   6.33   5.76   6.54 | Estonia
3.09 Internet bandwidth (quantitative data) 107 n 0.31 s s   4.79   4.55   111.22   2,403.87   74,142.18 | Luxembourg
                           

(Cont’d.)
Using Information and Communication Technologies to Boost India’s Competitiveness

Appendix 2: India’s Networked Readiness Profile (cont’d.)

Dev. Asia United OECD

China average States average
  Indicator Rank Score Evolution   (score)   (score)   (score)   (score)   Best performer

2009–2010 edition vs.

 
  2008–2009 2007–2008  

4. Individual readiness 7 5.69 s s   5.50   4.77   5.32   4.88   6.11 | Singapore

4.01 Quality of math and science education 22 n 5.03 t t   4.81   3.93   4.47   4.66   6.43 | Singapore

4.02 Quality of the educational system 37 n 4.36 t t   3.83   3.65   4.85   4.51   6.22 | Singapore

4.03 Buyer sophistication 33 n 4.01 t t   4.66   3.61   4.74   4.27   5.25 | Japan

4.04 Residential telephone connection charge 8 n 19.19 n/a n/a   n/a   98.68   39.00   99.28   0.00 | Multiple (3)
(quantitative data)
4.05 Residential monthly telephone subscription 39 n 7.68 n/a n/a   5.26   10.55   10.00   18.51   1.21 | Burundi
(quantitative data)
4.06 Fixed broadband tariffs (quantitative data) 3 n 16.40 n/a n/a   36.76   72.08   14.95   28.89   14.74 | Serbia
4.07 Mobile cellular tariffs (quantitative data) 3 n 0.07 n/a n/a   0.17   0.19   0.25   0.37   0.03 | Hong Kong SAR

4.08 Fixed telephone tariffs (quantitative data) 19 n 0.05 n/a n/a   0.06   0.08   0.24   0.18   0.00 | Multiple (7)
                           

  5. Business readiness 23 4.93 t t   4.72   4.03   5.45   4.99   5.92 | Switzerland

5.01 Extent of staff training 34 n 4.51 t t   4.22   3.88   5.31   4.67   5.68 | Sweden
5.02 Local availability of specialized research 32 n 4.68 s t   4.35   3.75   5.98   5.13   6.30 | Switzerland
and training services
5.03 Quality of management schools 15 n 5.38 t t   4.00   3.95   5.85   4.97   6.13 | Switzerland
48
5.04 Company spending on R&D 36 n 3.60 t t   4.17   3.23   5.63   4.29   6.02 | Switzerland

5.05 University-industry collaboration in R&D 46 n 3.80 s s   4.57   3.40   5.90   4.57   5.90 | United States

5.06 Business telephone connection charge 3 n 19.09 n/a n/a   n/a   128.90   72.26   101.40   0.00 | Hong Kong SAR
(quantitative data)
5.07 Business monthly telephone subscription 14 n 7.64 n/a n/a   5.52   17.18   45.27   22.96   1.21 | Burundi
(quantitative data)
5.08 Local supplier quality 41 n 5.03 t t   4.76   4.30   5.82   5.46   6.35 | Austria
5.09 Computer, communications, and other 25 n 42.07 t t   36.84   26.54   30.68   37.71   72.74 | Ireland
services imports (quantitative data)
5.10 Availability of new telephone lines 36 n 6.34 s s   5.82   5.34   6.70   6.44   6.93 | Iceland
                           

6. Government readiness 35 4.58 s s   5.09   4.18   5.10   4.51   6.12 | Singapore

6.01 Government prioritization of ICT 19 n 5.53 s s   5.55   4.73   5.62   5.02   6.37 | Singapore

6.02 Government procurement of advanced 68 n 3.57 s t   4.43   3.64   4.77   3.95   5.50 | Singapore
technology products
6.03 Importance of ICT to government vision 38 n 4.64 t t   5.27   4.17   4.91   4.55   6.47 | Singapore
of the future
                           

7. Individual usage 109 1.83 s s   2.79   2.24   5.28   4.89   6.43 | Sweden

7.01 Mobile telephone subscriptions (quantitative 116 n 29.36 s s   47.95   55.08   86.79   112.61   208.65 | United Arab Emirates
data)
7.02 Personal computers (quantitative data) 93 n 3.18 s s   5.61   5.67   78.67   51.08   97.60 | Switzerland
7.03 Broadband Internet subscribers (quantitative 96 n 0.45 s s   6.23   1.50   23.46   23.53   64.81 | Barbados
data)
7.04 Internet users (quantitative data) 113 n 4.38 t t   22.28   15.62   74.00   65.14   90.56 | Iceland
7.05 Internet access in schools 67 n 3.57 s t   5.45   3.56   5.94   5.23   6.64 | Iceland

(Cont’d.)
 Using Information and Communication Technologies to Boost India’s Competitiveness
Appendix 2: India’s Networked Readiness Profile (cont’d.)

Dev. Asia United OECD

China average States average
  Indicator Rank Score Evolution   (score)   (score)   (score)   (score)   Best performer

2009–2010 edition vs.

 
  2008–2009 2007–2008  

  8. Business usage 26 3.97 t t   4.73   3.27   6.10   4.34   6.10 | United States

8.01 Prevalence of foreign technology licensing 31 n 5.26 t t   4.30   4.18   5.56   5.42   6.10 | Canada

8.02 Firm-level technology absorption 30 n 5.47 t t   5.14   4.69   6.23   5.58   6.50 | Iceland
8.03 Capacity for innovation 35 n 3.64 t t   4.20   3.14   5.49   4.39   5.89 | Japan
8.04 Extent of business Internet use 43 n 4.89 s s   4.74   4.32   6.36   5.45   6.41 | Sweden
8.05 Creative industries exports (quantitative 10 n 3.26 n/a n/a   18.19   2.16   11.16   2.29   18.19 | China
data)
8.06 Utility patents (quantitative data) 58 n 0.53 s s   0.92   0.55   250.93   66.57   279.25 | Taiwan, China
8.07 High-tech exports (quantitative data) 50 n 3.34 t t   27.62   10.57   19.84   10.39   44.77 | Hong Kong SAR
                               

  9. Government usage 48 3.95 t t   4.45   3.52   5.69   4.58   6.20 | Korea, Rep.

9.01 Government success in ICT promotion 22 n 5.17 s s   5.27   4.39   5.19   4.59   6.22 | Singapore
9.02 Government Online Service Index 53 n 0.37 n/a n/a   0.37   0.30   0.94   0.57   1.00 | Korea, Rep.
(quantitative data)
9.03 ICT use and government efficiency 38 n 4.87 s t   5.12   4.30   5.26   4.91   6.31 | Singapore
9.04 Presence of ICT in government agencies 66 n 4.29 t t   5.42   4.05   5.81   5.17   6.50 | Singapore
9.05 E-Participation Index (quantitative data) 55 n 0.20 t t   0.37   0.18   0.76   0.48   1.00 | Korea, Rep. 49

Notes: Blue boxes ( n ) represent advantages; gray boxes ( n ) represent disadvantages. For indicators in which there is a tie for the top rank, the
word Multiple appears with the number of economies that share that score in parentheses.
The World Economic Forum is an independent
international organization committed to improving
the state of the world by engaging leaders in
partnerships to shape global, regional and
industry agendas.

Incorporated as a foundation in 1971, and based

in Geneva, Switzerland, the World Economic
Forum is impartial and not-for-profit; it is tied to
no political, partisan or national interests.
(www.weforum.org)