Digital India, smart cities projects catch the eye of IT companies
March, 03rd 2015
Otherwise wary of government contracts, software firms in the country are looking up to Prime Minister Narendra Modi's pet IT projects, Digital India and Smart Cities, hoping that the government will execute the two ambitious programmes through public-private partnerships in the absence of any big allocations for them in the 2015-16 budget. Experts say IT companies are attracted to the two programmes despite delays in receiving payment of about Rs 5,000 crore for the work they have done for the government in the past.
"Some of the Digital India projects are amenable to PPP approaches," R Chandrashekhar, president of the National Association of Software and Services Companies or Nasscom, told ET. "The PPP route does not mean all the investment will be done by an IT company. For example, the whole goods and services tax rides on an IT platform, so what has been suggested by the industry in that context is that you can have a public-private partnership model."
He added that in such a model, the companies would take over the technology risk to a contract, while the government could make financial payouts based on milestones. The industry had been pushing for a move to such a model for some time. In 2010, Tata Consultancy Services had put out a white paper, saying that a move to a PPP model would help the government move from procuring hardware, software and maintenance to procuring IT services. But according to some industry players, before this takes off, there has to be movement on the procurement bill and dispute resolution process.
In his budget speech last week, Finance minister Arun Jaitley announced that his government was moving a Procurement Bill and a Dispute Resolution Bill to make it easier for companies to work with the government.
While this impacts all industries, it was a key demand from the IT sector. Though the corporate affairs ministry's database and website is often held up as an example of a successful PPP in the industry, IT companies also want the government to help make some of the projects self-funded.
"With some of the projects the government charges a nominal amount for the access. One way could be for the fee to be paid directly to the IT company. This would help in
More IT projects have been moving to a PPP model. Haryana's egovernment model has two projects being executed on a publicprivate-partnership model — the software wide area network and the common services centres. Even the central government's eBiz project, aimed at improving the ease of business, is being deployed on a PPP model.
"There is a thinking within the government to not work in silos. So, there is a move towards leveraging other parties' strengths. For example, in a government project, they are open to using already existing technology platforms and solutions instead of starting from the scratch," an executive with a multinational technology company said.
Should the new model take off, experts say it will give a new lease of life to the players in the domestic IT market, in which the government is one of the largest spenders. Government IT spending this year is expected to top Rs 42,000 crore ($7 billion), according to consultancy Gartner.