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ICT Diffusion for Economic Growth and Sustainable

Development of SMEs: A Powerful Tool for reducing Spatial Disparities and enhancing Opportunities for development in

India*

Madaswamy Moni@

Mission: Distributed and Mobile Computing for Rural Prosperity

* Presented at the Workshop on Distributed and Mobile Computing organized by Department of Information Technology, Madras Institute of Technology, Anna University, Chennai , March 2005. @ Deputy Director General, National Informatics Centre, Department of Information Technology, Ministry of Communications and Information Technology (Government of India), New Delhi – 110 003. e-mail: moni@hub.nic.in;

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1. Introduction

1.0 Globalization and liberalization are increasingly shaping the international economic system, which present both threats and opportunities for Developing Countries. Globalisation is being argued as a positive force for poverty reduction but, in fact, is remaining as a theoretical model in many developing countries. The realization of the importance of Information and Communication Technology (ICT) in economic development, led the UN Commission on Science and Technology for Development (UNCSTD) to devote the years 1995-1997 to the study of the linkages between ICTs and Development. Information & Communication Technology (ICT) has provided the technological base for globalization, but followed the old pattern of unequal development resulting in the digital divide1. This digital divide has shaped, among the others, the flow of information and knowledge in the world:-

• Creation of technologies (- IPR Divide) • Diffusion of recent Innovation (- Digital Divide) • Diffusion of old Innovation (- Extension Divide), and • Diffusion of human skills (- Educational skills)

1.1 Information Concepts and Technologies are changing very rapidly and the economic importance of “information” has grown steadily. Information is a vital resource and has its applications in rural, agricultural, social, and industrial development, immensely. The extent of the use and application of scientific, technical and social information to advance development, determines the progress of a Nation. Informatics Networks, besides Computer Networks, are increasingly considered as development tools for achieving:

• Reaching the Unreached : Public Services

1 Digital Divide - Unequal access to information and communication technologies (ICTs) .

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• From Digital Divide to Digital Opportunities for sustainable development and economic growth.

• Fostering agricultural growth, poverty reduction and sustainable resources use.

• Sustainable Development & Earth Care Policies in the areas of Water, Energy, Education, Health, Agriculture & Rural Development, Biodiversity.

• A Cluster of Villages - Sustainable Societies in Viable Rural Space.

1.2 The major problems faced by the Country are unequal distribution of resources, poverty due to acute unemployment, bonded labour, child labour, lack of social security, non-exploration and utilisation of traditional and natural resources for both employment and setting up of industries. Among various sectors, SMEs constitute the 2nd largest sector in employment generation and constitute almost 40 – 50 % export annually. Our economic and industrial growths are dependent on production and productivity in agricultural sector. “Networking of People” and “Networking of Information” through localization are essential. One of the major problems of using ICT for rural prosperity is language barrier i.e. “localization”.

2. ICT & Governance: Models of Digital Governance

2.0 Models of Digital Governance (e-Governance) are continuously evolving and improvising to harness the potential offered by the Information and Communication Technologies (ICTs) and deal with new realities in the area of governance. There are no rigid and finite models of Digital Governance. In fact, several developing countries are putting into practice innovative e-Governance models that may technologically simple but are changing the way information is distributed in the society. Based on primary experimentation and secondary research, a few generic models (http://www.digital

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governance.org), which have emerged and are being practiced, have been identified, on the basis of: emergence of knowledge societies and knowledge networkers, role of information in governance process, and link between ICT and governance, are as follows: -

• Broadcasting / Wider-Dissemination Model: National and Local Governments in developing countries need to aggressively adopt this model if they want to enhance participation of citizens in the governance processes.

• Critical Flow Model: Different organizations can use it differently depending on the aspect of governance they want to address. By focusing on the critical aspect of information and locating its likeable users, the model corrects information failure, raising awareness about the bad governance practices, and acts as a hindrance to bad governance practices.

• Comparative Analysis Model: Developing countries could very effectively use this comparative model as ICT opens their access to the global and local knowledge products at a relatively low-cost. The model however becomes ineffective in absence of a strong civil society interest and public memory that is essential to force decision-makers to improve existing governance practices.

• E-Advocacy/ Lobbying and Pressure Group Model: The model enhances the scope of participation of individuals and communities in debates, which affect them and help them, build a global alliance.

• Interactive-Service Model: The potential of ICT for the governance is fully leveraged in this model and leads and can bring lead to greater objectivity and transparency in decision-making processes. This Model facilitates establishing decentralized forms of governance (G2C2G or G4C4G).

2.1 Over the past decade, many have cited the international information superhighway or the Internet, as the means by which the concept of a global village2 could be realised. India’s Broadband Policy (2004) envisages facilitating “using internet towards doubling per capita rural GDP in ten years “. ICT has broadened our definition of poverty3 also, as it has a place

2 Global Village is a vision of a future in which, every citizen of the Planet Earth experiences life-- personal, professional, cultural and social -- as a member of a virtual village. 3 Hans d’Orville : “IT for Development Programme”, UNDP

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alongside with adequate food, health care, education, and other fundamentals for livelihood security. Most discussions on digital technologies: “Technology for Development” or “Development of Technology”, were couched in optimistic versus pessimistic perspectives (Hamelink, 1997)4 – “expanded productivity”, “improved employment opportunities”, “improved democratic process”, “reinforce historical trends towards socio-economic disparities” and “inequalities”, etc. However the guiding principles of designing ICT for development projects are: -

• Focus on the Disadvantaged Communities, who otherwise will be

excluded • Provide that information or service which otherwise will not be

provided • Focus on utilizing and where possible building upon what is

existing rather than thrusting a new intervention • Create an outcome which in absence of ICT, will not be produced

efficiently or timely • Understand the difference between direct benefits and trickle-

down benefits for the disadvantaged community.

3. Digital Economy and Development: A Myth or Reality in Developing Country?

3.0 A global economic transformation - digital economy5 - is now intensifying and leading to a rapid economic growth. Internet Technology and other new enabling technologies have facilitated companies to integrate and maximize changes (i.e. restructuring, business-process standardisation, enterprise resource planning, etc.) during 1990s. Virtually, all Information & Communication Technology (ICT) investments have become a part of inter-linked communication systems, whether Organisation (internal) to a business (O2B), between businesses (B2B), between individuals 4 C. J. Hamelink: “New information and communication technologies, social development and cultural change”, DP 86, United Nations Research Institute for Social Development, Geneva, June 1997, p. 27. 5 Digital Economy – Information (0s & 1s) Management and Movement

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and business (B2C), and individual to individual (C2C). The rate of change is just as rapid as ever, and the direction is irreversible. Software Industry is the world’s most critical industry and will be of “the same status” for years to come. The major characteristics of today’s business opportunities include:

• Time-to-market (less and hence quick production) • Increased productivity due to ICT and Computers • The “weightless economy” – increased valuation of

intellectual property – displacing oil, gas, and other types of durable or physical goods from the old economy as the primary means of making money

• Globalization, Liberalisation and Privatisation • Consolidation – Global Mergers and Acquisitions

3.1 Internet Commerce (e-Commerce) is growing fastest among businesses and four types of economic activities drive its growth (i.e. formation of Free Trade Zone on Internet):

• building up the Internet • e-Commerce among Businesses • digital delivery of goods and services • Retail sale of tangible goods.

3.2 This has led to a growth of supply capacity through capital-augmenting technological change, which in turn, changed the capital and labour markets, and has generated greatest demand in the following areas: Web Services Development, User Interface Design, Business Domain Expertise, Security Expertise, and Mobile Application Development. XML (eXtensible Markup Language) standards bodies such as BizTalk, cXML, and RosettaNet are working to develop the syntax for XML that will streamline and enable B2B Commerce, using a standards-based approach, which will align Supply Chain Management (SCM) on a global basis.

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3.3 In today’s economy, finding ways to leverage technology and services to be more efficient, reduce costs, and develop flexibility to respond rapidly to the changing market, is critical for survival. Value Chains6 are today being perceived as the next logical step for enterprises in order to cut costs and increase Return-On-Investment (ROI) in terms of: Return-On-Process, Return-On-Knowledge, and Return-On-People. Integrating disparate applications on the “Process and Data” level is one of the greatest challenges in Value Chain Integration. While vendors are gearing up with process integration capabilities, harnessing the tools’ capabilities is tied to the ability to design efficient business processes.

3.4 Value Chain Markup Language (VCML)7 is a comprehensive set of XML-based, industry-specific vocabularies8 (words and meanings) and documents required to conduct business over the Internet, allowing for the integration of Supply Chain (SC) and Demand Chain (DC) resulting in true Value Chain Collaboration over Internet. VCML vocabularies are currently based on industry-specific implementations of ANSI X12 and EDIFACT/ EDI, and adoption of VCML is a sound interim step, in moving from standards such as EDI towards emerging B2B standards such as ebXML (e-Business XML). 3.5 Various international and regional organisations such as APEC, WTO, OECD, G-8 Nations, ITU, EU, UN, World Bank,

6 Value chain is a high-level model of how businesses (production and services) receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers; and spans vertical and horizontal relationships within and across industries: Production Exchange Distribution Consumption 7 Ref: http://www.vcml.net/resources/overview.xml 8 A vocabulary is a collection of business terms and their associated meanings as they relate to their use in business. Each industry, as well as each company within an industry, has a vocabulary in which they conduct business.

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WIPO, ISO etc., have attached much importance on the potential for international e-Commerce over the Internet. WTO has largely addressed e-Commerce under “trade in service”, where as Trade facilitation is being handled by GATT. However, the growth of e-Commerce has overtaken the pace of development of regulatory mechanisms and philosophy. North-South digital divide may possibly widen, unless the issue is addressed realistically and e-commerce is used as a tool for involving more enterprises and institutions.

3.6 In the present “crucial decade” of this millennium, a high rate of investment in Information Technology capital and a supportive environment are expected to achieve “digital economy”. Its rapid growth however depends on9 :-

• A higher rate of productivity growth related to

investment in Information Technology; • A rise in Total Factor Productivity (TFP) growth due to

Information Utilisation across the economy and resulting in “spill-over” effects;

• An increase in factor utilisation; and • A decline in the non-accelerating inflation rate and rate

of unemployment.

3.7 As the world economy is being integrated through ICT, developments policies need to be rethought to help developing regions with in a country connect to the new information-based world economy, i.e. digital economy.

9 M.Moni (2000): “New Productivity Paradigms and Strategies in the e-Age – Government Initiatives on IT-led Development in India”, International Conference on Productivity in the e-Age, Asian Productivity Organisation, 22-24 November 2000, New Delhi.

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4. ICT Diffusion: A Sine que non for Productivity & Growth

4.0 Various study results strongly support that the “payoff” effect of ICT on economic growth can be achieved only through a robust National Information Infrastructure (NII) that supports ICT adoption and application. ICT diffusion derives economic force from the complementary development of a knowledge-intensive society(Eunice Wang, 1999)10. The diffusion of ICT throughout all sectors (primary sector, secondary sector and tertiary sector) is, therefore, far more important than the production of ICT industries per se, to usher in economy growth and development based on “digital technologies”. India is expected to gain from the “emerging Digital Economy”, as it has:

• affordable access to core information resources, cutting edge technology and to sophisticated telecommunication systems and infrastructure;

• the capacity to build, operate, manage, and service the technologies involved;

• policies that promote equitable public participation in the information society as both producers and consumers of information and knowledge; and

• a work force trained to develop, maintain and provide the value-added products and services required by the information economy.

4.1 Indian ICT Industry has tremendous potentials to become an engine of growth and productivity improvement for all sectors of the economy and for the country as a whole, with special emphasis on multi-lingual technologies11. Research studies

10 Eunice Wang (1999) : ICT and Economic Development in Taiwan : Analysis of the Evidence”,

Telecommunications Policy, 23(3,4), April/May 1999, pp235-243 11 Annual report of the Ministry of Information Technology, Government of India, 1999-2000

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in the 1990s confirm, “While the full economic impact of Information Technology cannot be precisely evaluated, its impact has been significant”12. It is a well-established fact that: “there exists a complementarity relationship between Information Technology and Productivity”. Productivity implies the effective and efficient use of resources: labour, Capital, land, materials, energy, time, information, etc.

4.2 Innovation is one of the keys to success in a knowledge-economy (k-economy) and it is R&D that determines innovation. St. Thiruvalluvar, the Poet and a Philosopher from South India (Tamilnadu) who belongs to the first century B.C. (31 B.C.), states that “Knowledge guards one against distress” (“Arivu Attram Kakkum Karuvi” - Thirukkural 43:421), and that “the Wise have everything” (“Arivudaiyar Ellam Udiayar” - Thirukkural 43:430). The economist, Joseph Schumpeter, defined in 1912 in his book, (the Theory of Economic Development) that innovation comes from the "Neuer Kombinationen", New Combination. The concept is still alive today. In the words of the knowledge scholar Takeuchi, "in an economy where the only certainty is uncertainty, the sure source of lasting competitive advantage is knowledge". The focus of industrialized economies is surely shifting from natural resources to intellectual assets, whereas the agricultural economies are shifting to sustainable natural resources consumption, conservation and management. 4.3 The innovation process is a Value Chain and Research is the sine qua non of innovation (Knowledge Value Chain). In this process, the role of Technology Business Incubators (TBIs) as part of the system of innovation has become all the more

12 The United States of America (Department of Commerce) (1997) : “The Emerging Digital Economy” http://www.ecommerce.gov

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important for transformation of technological ideas into commercial benefits. Rapid emergence of knowledge-based economies required a paradigm shift in technology transfer services from traditional (i.e. horizontal company-to-company transfer of commercialized technology through a worldwide network of technology brokers) to Internet and vertical transfer of technology from R&D laboratories to industries. 4.4 IT Enabled Services (ITES) market – a sunrise industry for next 15 years - is expected to touch Rs 81,000 Crores by 2008, generating direct and auxiliary employment for two million Indians. India is a sustainable destination for ITES but a lot more needs to be done to leverage off and maximise the opportunity that this segment represents for India’s economic development and prosperity i.e. a sustainable competitive advantage (Arun Seth, 2002)13. Research findings of recent past, by international consultancy firms (Forrester Group, McKinsey & Co, Giga Information Group) re-endorsed India's prowess in this field.

4.5 Studies on indicators of technology-based competitiveness indicate that India has a high standing in terms of the institutions and resources that contribute to a nation's capacity to develop, produce, and market new technology. The employment dynamics in Information Economy, as categorised below, can move the “Value Chain up in India” to attain “Win-Win-Win” situation, if appropriate researched policy guidelines are available:

(a) The Indian software industry not recognised that well for its products (Product Software) but more for its services (Project Software):

13 Arun Seth (2002) : “Destination India”, Economic Times, March 27, 2002 & Managing Director, BT Worldwide (India & SAARC) and Head of the Call Centre Forum at Nasscom)

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(b) Economic value of software production through projects (Software services) in the global market higher than that of software production through products (Software Products).

(c) As the IT Enabled Services (ITES) Industry moves up the maturity curve in India, it is facing new challenges with the changing pricing models demanded by the client companies (i.e. no more a fixed time employee - FTE – model).

(d) ITES industry as a “lighthouse industry”, as the next 15 years would belong to ITES; ITES is the brass ring that India will grab it.

(e) Long Term Business Models (LTBM), for India IT Services Enterprises, emerging in India: - Global Contract Manufacturing, Global Systems Integrator, IP-led Service Player and Sliver focussed Service provider, to grow in the changing business environment;

(f) Despite low production and labour costs, India’s inability to compete with Thailand, Korea and the Philippines, in “e-games” segment;

(g) Need to develop R&D, design and engineering capabilities while participating in leading edge technologies;

(h) Target 2008: IT Services to be 7 Per Cent of GDP and 30 Per Cent of India’s Foreign Exchange Inflows, and create 4 Million Jobs.

(i) Indian IT Sector is on track of achieving its ambitious goal of over $50 Billion exports by 2008 despite depressed economic scenarios and marked slowdown in the growth of industry during the last two years (NASSCOM-McKinsey Study-2002)

4.6 A recent Price Waterhouse Coppers (PWC) study report, however, reveals that the most interesting shift has come in the form of "management consultancy firms” providing “IT solutions” and “Indian IT services companies” pitching for “consultancy assignments” to grab a larger spectrum of the IT Value Chain. This is not advisable, as it is not going to be advantageous to India in the long-term. India should concentrate on “core process” and “stay for years” together to get maturity and digital dividends through “pervasive ICT diffusion in all aspects of production and services”.

4.7 Small & Medium Enterprises (SMEs), which are a crucial part of their economy in terms of employment as well as growth, are at crossroads now. While developed countries have already taken a lead in this direction, developing countries have yet to fully exploit this system particularly to invigorate Small &

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Medium Enterprises (SMEs), which are a crucial part of their economy, in terms of employment as well as growth (Jürgen Bischoff, 2001)14.

5. ICT Diffusion: A Value-Up-Chain for SMEs in India

5.0 The challenge for entrepreneurs is to think about creating solutions for the twin engines of future growth – Rural India and SMEs. Cluster approach has been one of the spatial policies for infrastructure development of SMEs. Other approaches (non-Cluster) included Industrial Estates, Industrial Growth Centres, Export Processing Zones, Industrial Parks, Integrated Infrastructure Development Centres and National Programme for Rural Industrialization. This SME category will also include, for the purpose of this paper, these categories of industries also: SSEs – Manufacturing and service oriented Units, SSIs, Ancillary Undertakings (AUs), Exports Oriented Units (EOUs), Women Enterprises (WEs), Small Scale Service Business oriented (Industry Related) Enterprises (SSSBOEs). It has been understood that the proximity of a web of businesses lowers the unit cost of infrastructure, leads to accretion of skills and is a source of informational economies.

5.1 Small and Medium Enterprises (SMEs) have always been the engine of growth in developing as well as in transition economies. Many developed economies (i.e. Japan, U.S.A) owe their industrialization to SMEs. SMEs are proven Innovators and the

14 Jürgen Bischoff (2001): “ An Overview of Successful International Technology Business Incubator Programmes”, The First International Workshop on Technology Business Incubators in India (ITBI India 2001), 29-31 January 2001, Bangalore, India & Director, Asian and Pacific Centre for Transfer of Technology (APCTT), New Delhi (India).

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driving force behind a number of technological breakthroughs. SMEs have been identified as high potential sector for employment generation and source of livelihood to millions of people in Asian, African, and Latin American countries. Many studies show that SMEs worldwide largely under-utilize the intellectual property (IP) system (Wolfgang, 2001)15. This may be due to (i) unawareness of the IP system and its usefulness, (ii) perceived high costs and complexity of IP system, (iii) lack of easily accessible assistance. 5.2 SMEs sector today is at a crossroads in India and the World over, as the process of globalisation has impacted SMEs much more than larger business enterprises. SMEs are the second biggest employment generators after agriculture, providing jobs to over 9.2 million people in India. In India, the SME sector accounts for 39 per cent of industrial production and 34 per cent of exports. It is estimated that there are around 350 SME Urban clusters and approximately 2000 Rural and Artisan based clusters in India.

5.3 Micro, Small and Medium Enterprises (Micros/SMEs) face information asymmetries in two ways: (i) in their own access to market- and business-related information, and (ii) as providers of services to poor people. Informational costs of isolation and low volume can be reduced through formation of groups, associations, business clusters, and franchising. Innovative use of information technology and telecenters can cut down transaction costs, and enable micro-entrepreneurs and SMEs to connect to information about markets more effectively. There is a need for serious global thinking on how to ensure greater stability of SMEs, how to provide greater social security for those working in

15 Wolfgang Starein (2001): Intellectual Property and SMEs - A Brief Account of WIPO’s Strategy and Activities, (Director, SMEs Division, WIPO) September 2001.

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this sector, and, at the same time, how to retain the dynamic force that drives this sector (Vajpayee, 2002)16.

5.4 International Business Centre (IBC) survey report17 for the Department of Scientific & Industrial Research (DSIR) on Transfer of Technologies (TOT) shows that developing countries traditionally import technologies from America & Europe, and but in recent years, they have turned attention for technologies to other countries like Japan, South Korea, and Australia. According to the report, the merits of technologies of Indian SMEs are categorised as follows:

• Intermediate technologies proven in Indian market, • Less capital intensive & hence better utilization of human resources, • Easy to assimilate and operate, • Moderate Price (cost-effective), • Reasonable operational cost/Low cost of trouble- shooting, • Value-addition to natural resources, • End products successful in both domestic & international market, • SMEs’ preference for African countries, due to the presence of

development banks, to Central Asian Countries, and • Hardly any psychological resistance of units & government agencies

in accepting technology from SMEs from India. 5.5 An effective strategy to overcome this inherent weakness of SMEs is to network enterprises (Figure-1) with institutions and organisations active in the area of SME development, information networks, and data banks as well as with technology generators. The IBIS programme18 of UNIDO, the AGMARKNET project of the Government of India for

16 Atal Bihari Vajpayee (Hon’ble Prime Minister of India) addressed the Global Summit on Small and Medium Enterprises (SMEs) in New Delhi on 20-12-2002. 17 International Business Centre of MITCON set up with the assistance the Department of Science & Technology and the Ministry of Commerce of the Government of India, and the Government of Maharashtra. 18 INTERNATIONAL BUSINESS INCUBATION SYSTEMS (IBIS) - an institutional mechanism developed by UNIDO to help promote individual entrepreneurs, especially those planning new products based on existing or new technologies in India, by networking them with successful SMEs in developed countries.

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farmers, and ITC’s E-Trade Bridge for SMEs in India improve their e-readiness (i.e. creating internationally competitive e-commerce competence among SMEs) to penetrate into export markets. Establishing such an integrated service package on Internet is a very challenging task (Vadim Kotelnikov, 2001)19. e-Commerce has drastically shifted the paradigms of international trade. Cost effective access to international markets, instantaneous information exchange and changing buying practices are resulting in a quantum jump in global online exports. In the 21st Century, e-commerce will really be the engine that will drive exports globally. Experts from the Indian Ocean RIM Countries have urged the Member Countries to evolve a unified and harmonised regulatory framework for e-Commerce.

5.6 Rural development is a process of sustained growth of the rural economy (agriculture, industry, construction, transportation and commerce). Industrial growth and Economic growth are dependent on production and productivity in agriculture. Agricultural development, along with rural enterprise is therefore the cornerstone for promoting sustainable rural livelihoods. Rural towns are essential to farm households, as they offer “economies of agglomeration”. E-Commerce has the advantage of bringing SMEs and individuals to the global markets (i.e. reduced cost and by-pass traditional links in the supply chain). Small and Marginal farmers (i.e. agricultural SMEs) require this as a public good.

5.7 The development strategy should, inter alia, facilitate skill improvement, provide employment in rural areas, transfer of appropriate technology for industrialisation, and promote self-

19 Vadim Kotelnikov (2001): “Development of Web-aided Technology Transfer Services for SMEs in Asia”, Asian and Pacific Centre for Transfer of Technology (APCTT), New Delhi, India.

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reliance among the people, and build-up a strong rural community base. The locus of agricultural growth has already been shifted from production front to the processing and marketing front. Rural cooperatives are, once again, emerging as alternatives for making rural economy vibrant through agro and rural based industries. The rural economy can be vibrant iff agro and rural industries are positioned and integrated with the national and global economy.

5.8 Knowledge based training may provide them a ray of hope for concretizing their future strategies. However, the concept of training has not percolated down to the SMEs (Sudhir, 2001)20. Use of traditional and modern information and communication technologies (Website, E-mail updates, distance learning, e-learning, etc) is essential to disseminate information on IPRs for SMEs. SMEs require training in the following areas:

• Marketing Strategy of SMEs; Role of Trademarks and Industrial Designs (Case studies with focus on the role of trade marks, including certification marks, geographical indication, and industrial designs; introduction to basic concepts and registration procedures as well)

• Solving Production and Product Quality Problems of

SMEs; Role of the Patent System (Case studies with a focus on the role of patents; introduction to basic concepts and patent grant procedure as well; use of patent information services, and access to patent information services in India)

• Using IPRs for Safeguarding Business/Trade Secrets

(Case studies with a focus on trade secret protection, importance of confidentiality agreements with employees

20 Sudhir K. Jain (2001): http://www.isbc2001.org/home/Sudhir%20Jain.pdf

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and potential licensing partners, and introduction to licensing of IP)

• Relevance of Copyright to SMEs (Case studies with a focus

on introduction to basic concepts of copyright and related/neighbouring rights; copyrights and SMEs in the handicrafts sector, or those having a presence on the internet, that is, those having e-mail address or WebPages, as well as SMEs in e-business/commerce, software development or the cultural industries)

• Role of International, Government and Private Sector

Agencies in Meeting IP needs of SMEs (Focus on the role of WIPO, relevant Ministries, the Patent Office, Trademarks Registry, Courts, Customs, Police, SME financing and support agencies, and role of IP Law Firms, IP Agents/Attorneys, Chambers of Commerce and Industry, Collective Management Associations for Copyrights and Related Rights, SME Consultants, etc)

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Urban SMEs

Clusters

Rural SMEs

Clusters

Urban SMEs

Clusters

Rural SMEs

Clusters

Rural SMEs

Clusters

Figure – 1: Rural and Urban SMEs Networking

6. Digital Opportunities: A way forward for Reduction of Spatial Disparities and Enhancing Opportunities for

Development of SMEs to penetrate into export markets

6.0 Digital opportunities now help realize the concept of “sustainable communities”, which is one where all stakeholders are partners in progress on the road to economic development – “sustainable production” and “sustainable consumption”: “Computerisation of Societal Systems” and “Using Internet towards Doubling Per Capita Rural GDP in Ten Years”. Rapid emergence of knowledge-based economies required a paradigm shift in technology transfer services from traditional (i.e. horizontal company-to-company transfer of commercialized

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technology through a worldwide network of technology brokers) to Internet and vertical transfer of technology from R&D labs to industries.

6.1 Micro, Small and Medium Enterprises (Micros/SMEs) face information asymmetries in two ways: (i) in their own access to market- and business-related information, and (ii) as providers of services to poor people. SMEs use their customers as a key source of information for innovation, but in future their customers may instead expect technological innovation from them. There is a risk that technology foresight will be thought of as "someone else's job", and may not be adequately addressed within the Value Chain (Reed and Walsh, 2000)21. In this context, Innovation22 is of critical importance and plays a central role as an engine of growth in providing employment and competitiveness, and as a cornerstone of enterprise policy.

6.2 Technology transfer is a very sophisticated process requiring substantial expertise in various relevant areas. According to Vadim Kotelnikov of UN-APCTT, just information on technology opportunities and simple matching of prospective technology buyers and sellers does not produce desirable results in most cases. The Internet, which allows intangible information and ideas to be traded and exchanged instantly, across any distance, is the most recognizable symbol of today’s global, knowledge-driven economy. Technologies that were traditionally traded mainly through technology brokers and business consultants now find easier and faster routes to target users

21 F M Reed and K Walsh (2000): “Technology acquisition and the changing face of manufacturing Industry “, Proceedings of the 3rd International Conference on Stimulating Manufacturing Excellence in Small & Medium Sized Enterprises (SME-SME 2000), PP.128-139, 17-19 APRIL 2000, COVENTRY UNIVERSITY, U.K. (ISBN 0905949862) 22 Innovation – the capacity to assimilate and convert new knowledge to improve productivity and to create new products and services.

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through Web-based Technology Transfer Portals (WTTP). Science is global, but technology is always local. SME managers aren't scientists but businessmen, and therefore, require an integrated technology transfer service package, that would include technology and business studies, contract negotiation, finance syndication, and legal advise to successfully implement such projects.

6.3 Supply Chain Management (SCM) is important for SMEs, as the supplier, the customer, the logistics partner and the manufacturer together involve in the material flow, the information flow and the fund flow. While the material flows from the back end (supplier) of the supply chain to the front end (customer), money flows in the reverse direction. The information flows on both directions. Collaborative planning and information sharing practices will streamline the information flow in the supply chain. A good supply chain management will provide superior value to the ultimate customer23. SMEs can greatly exploit the web technology to streamline the information flow. Planning disruptions, delayed delivery, missed opportunities to do more business are a few to mention. Improved communication will benefit all the supply chain partners in the long run. Indian SMEs have realized the importance of productisation and specialization to survive in an ever-changing market.

6.4 Doing business on the Net is not about creating good-looking Websites but about re-engineering the entire business process into a robust system that harnesses the enormous opportunities that the connected market place will present. Informational costs of isolation and low volume can be reduced through formation of

23 Mahadevan.B (2001): Why Supply Chain Management is important for SMEs?, Indian Institute of Management, Bangalore (India) & mahadev@iimb.ernet.in

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groups, associations, business clusters, and franchising. Innovative use of information technology and telecenters can cut down transaction costs, and enable micro-entrepreneurs and SMEs to connect to information about markets more effectively. The ingredients of this engineering process would be:

• SME TechWeb (Technology, R&D, Innovation) is a European Commission Website provides information and resources for technology-oriented company with fewer than 250 employees (small and medium-sized enterprises, or SMEs) - especially those wishing to innovate and internationalize.

• Oracle e-business suite is an integrated suite of Internet business applications that automates critical business process across both front and back office operations.

• Sme.com.ph is an e-commerce portal of SME Solutions, Inc. created exclusively for Philippine SMEs aimed at promoting the key areas of business operations through the combination of traditional methods and technology tools.

• Sri Lanka’s web site for SMEs is established with the financial assistance from the Asian Development Bank (ADB).

• Technology4sme.com & Business e-Coach for Asia-Pacific SMEs, established by UN APCTT - an Asia network of Model Technology Transfer Agencies (MTTAs).

• SMEs in India (www.smallindustryindia.com) with over 50 categories and 30 Lakhs records.

• TIFAC (Technology Information, Forecasting and Assessment Council) - http://www.tifac.org.in – for technology and business links, partner with TIFAC;

• Indian Patent database - http://www.indianpatents.org.in • SAP’s mySAP.com Internet business strategy (mySAP.com workplace,

mySAP.com marketplace, mySAP.com business scenarios and mySAP.com application hosting

6.5 Areas of business that are targeted for improvement of SMEs are: User profiling, Supply Chain, Value Chain, Customer-Relation-Management (CRM), SME Networks, and Supplier Cooperation. These areas require (a) Web services development, (b) Turn-Key ICT solutions for SMEs clusters, (c) Mobile Applications Development, (d) Application User Interface Design and security Enterprise.

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7. What is a digital SME?

7.0 A Digital SME is an SME that exploits ICT to its full potential in a holistic manner, e.g. changing products and services, changing markets, changing relationships with customers, new types of value chain and forms of cooperation and alliance, new organizational and management configurations, new ways to manage knowledge, etc. There are three sub-categories of digital SMEs, as given below:-

a. An SME whose products and services are predominantly digital; b. An SME which uses digital methods as the primary means of

carrying out core operations - marketing, sales, service etc (e.g. a pure dot.com);

c. An SME that exploits the benefits of digital methods to a significant extent.

7.1 The focus is on SMEs’ best practices in exploiting the opportunities provided by ICT to improve performance. Attention is devoted to SMEs evolution and to the “external” factors, related to “digital economy” that directly affects SMEs success and development. This focus will result in addressing:

• Structural changes in SMEs organization and management related to the impact of digital economy;

• Changes in the competitive scenario that may affect the SMEs evolution;

• Interventions and policy instruments that have contributed to foster the SMEs adaptation to digital economy.

7.2 The analysis will consider both single business units and networks of SMEs. In fact, the networks, both informally and formally defined, are important organizations for the small companies and several experiences (such as the industrial clusters) show that networking is a successful way to improve SMEs competitiveness. However, it is essential to have an

24

“Integrated Policy Framework for Community and SMEs Development in Digital Economy” for the Country.

8. Broadband to induce Internet among the Customers

and SMEs

8.0 Internet among the Customers and SMEs is very limited in India. Further poor telecom and infrastructure for reliable connectivity is another barrier for adoption for e-Commerce in India. While internet connectivity is slow, access costs are high and connections are unreliable. This constraint has been removed by the National Broadband Policy 2004: “Always On” data connection with a minimum download speed of 256 kbps through unbundling of the “last mile” link of the incumbent telecom operators (BSNL and MTNL). Other means of spreading broadband includes cable television, satellite (DTH and VSAT), terrestrial wireless, Fibre-to-Home, Fibre-to-Building, and Fibre-to-Community.

8.1 Availability of broadband services at affordable price levels would have a significant impact on GDP, affect new investment, create job opportunities, provide access to new and improved services, and increase productivity through infrastructure creation (Dayanidhi Maran, 2004)24. The Asian markets including India are poised for a broadband revolution. But the key to its success lies in meeting the content development challenge driven by Governments and right regulatory environment (Neel Rattan, 2004)25.

24 Mr. Dayanidhi Maran, Union Minister of Communications and Information Technology, in The Economic Times, 3

June 2004.. 25 Neel rattan (2004): “Broadband growth hinges on Content, Pricing”, Business Line, 19 January 2004..

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9. Distributed and Mobile Computing: New opportunities for economic growth and employment

9.0 Recent advances in hardware technologies, such as portable computers and wireless communication networks, have led to the emergence of mobile computing systems26. The simple mobile telephone itself is a product of convergence of three technologies – telephone, computer and television. The evolution of Network Based Computing relates to Distributed and Mobile Computing (DMC) (Figure-1), and two new directions of computing; Grid computing27 and Pervasive computing28. The key of Pervasive computing is middleware technology, whereas the Grid environment itself is a middleware designed to coordinate other middleware.

9.1 Pervasive computing enables a wide variety of applications, ranging from secretarial support to technical support for customers, to services for automobile drivers, to retail and business-to-business e-commerce. As computing power becomes pervasive in a wide variety of environments, traditional keyboard, mouse, and monitor interfaces is giving way to novel interfaces, including natural-language recognition of speech and handwriting, visual recognition of gestures, and even recognition of emotions. Thanks to such interfaces, pervasive applications thus help people remain focused on a task rather than distracting their focus from the task to a computer.

26 Mobile computing allows ubiquitous and continuous access to computing resources while users travel or work at a

client's site. 27 Grid computing coordinates network resources and mimics electrical power grid by bringing remote computing

power uniformly and transparently to the users.. 28 Pervasive computing emphasizes everywhere, all-time services and “human-centered” view of computing.

26

9.2 Wireless communication, whether over a wide area, a local area, or a range of a few feet, is fundamental to many mobile computing applications. An evolution is occurring in wireless and portable computing: Wireless Internet. Smart hand-held devices will drive the Wi-Fi revolution as they are cost effective, lighter, user-friendly, and can be customized for specific applications. WiMAX29 is a long distance Wireless networking Technology designed to replace DSL and Cable Internet Access (Intel’s Plan – Intel Wireless Connect). WiMAX could be DSL and Cable what cellular was to landline.

9.3 A user's location will become information that is as common as the date is today; getting input from GPS, when outdoors, and other location providing devices, when indoors. Availability of location information will have a broad impact on the application level as well as on network level software. The emergence of new services and the growth of existing services are expected to expand the overall information market leading to new opportunities for economic growth and employment.

29 WiMAX is a Radio technology that can blanket entire cities with high speed internet access.

27

(Figure-2: Source: OBR Center for Distributed and Mobile Computing (CDMC) Laboratory at University of Cincinnati, U.S.A & http://www.ececs.uc.edu/~cdmc)

Distributed and Mobile Computing: Complexities and Challenges

9.4 While distributed computing and mobile computing are often not considered as `new' technologies, a number of technical issues have not been resolved and are facing new complexities (Xian-He Sun, http://www.cs.iit.edu/~sun/). Challenges of maintaining reliable connections with mobile devices and enabling wireless communications in small, low-power devices are paramount in nature. Distributed and Mobile Computing environment has ushered in new database problems. The status of data management in mobile computing is similar to that of distributed data management versus centralized data management in the 1960s.

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9.5 It is viewed that a mobile DBMS computing environment as an extension of a distributed system: “Mobile Heterogeneous Multidatabase System”. By viewing distributed databases as a special case of mobile databases, Margaret H. Dunham and Abdelsalam (Sumi) Helal30 have seen that some solutions for database problems in the distributed environment do not work well in a mobile environment. Many of the issues are the same, but the solutions are different. Alonso and Korth [1993]31 concentrated on the impact that mobile computing (or nomadic computing) has on various database processing activities: query optimization, transaction models, and security. The relevant research issues addressed are:-

• Mobile (or location-sensitive) query languages, specifically SQL extensions;

• Mobile database design, especially those issues related to the automatic maintenance of metadata that maps data sets to locations;

• Efficient yellow page archiving that will allow data (about services) and its associated location to be dynamically registered and discarded;

• How to specify the degree of consistency between the mobile application cache and the stationary copy? Should this be implemented at the system-level or at the programming language level?

• Migration of data into the mobile host for extremely long-lived applications (i.e. integration of Mobile Phone and USB drive with portable operating system)

30 Margaret H. Dunham and Abdelsalam (Sumi) Helal: “MOBILE COMPUTING and DATABASES: ANYTHING NEW?” (mhd@seas.smu.edu & helal@cs.purdue.edu) 31 Rafael Alonso and Henry F. Korth (1993): “Database system issues in Nomadic Computing” in Proceedings of the ACM International Conference on Management of Data, pages 388-392, May 1993..

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• Migration is dynamic data redistribution, not a form of caching. How can data be migrated into the mobile application? This is not achievable by simply invalidating the primary copy (stationed copy).

• And even if migration is successful, would access to an already migrated data be allowed only locally? If not, we end up with a mobile application, mobile server model, whose behavior is very difficult to predict.

9.6 While enterprise servers and networks are increasingly protected using standard security technologies, files are not protected after they are received on employee and partner computers. Rapid growths in distributed and mobile computing are tearing down enterprise security boundaries built today with Virtual Private Networks (VPNs) and Firewalls. Companies have paper shredding policies but they don’t have the tools to track and shred electronic documents that are proliferated by the growth in distributed and mobile computing.

9.7 Organizations cannot afford to keep non-critical data or stale data on expensive primary memory storage for a long time and need to shift to secondary storage. Demand for higher performance is on the increase. Information Lifecycle Management (ILM) may be the way forward. Implementing ILM is a policy decision and has become very complex as it needs to involve every department in the organization. In USA, there are three important regulations namely: the Sarbanes-Oxley Act, the Gramm-Leach-Bliley Act and SEC 17a-4, forcing organizations to craft an ILM strategy.

9.8 Adding to this challenge is the increase in regulations and legislation requiring increased control and protection of information. How can companies be confident that their use of

30

new communications and computing networks comply with laws as well as their own needs to protect information? Ernst &Young (E&Y)’s Global Information Security Survey 2003 reveals that:

• Information security is of high importance for achieving their overall objectives (90% of Organizations surveyed said).

• Organizations are inadequate in their ability to respond to incidents (More than 33% of organizations said).

• Compliance with applicable security-driven regulations (Only 34% of organizations claimed to be).

9.9 Security is especially important in mobile computing because wireless transmissions can be sent and received by unknown parties, and because mobile devices are susceptible to loss and theft. Information Security should overcome the hurdles of user acceptance and IT architecture compliance with easy installation, intuitive user interfaces, and operation with all popular operating systems, all popular file formats, and industry-standard protocols. 9.10 The flexibility introduced by mobile computing brings new challenges to dependability and fault tolerance. Failures that were rare with fixed hosts, become common, and host disconnections make fault detection and message coordination difficult. This is posing problems for e-Commerce and e-Business.

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Distributed and Mobile Computing: Data Development

Strategy 9.11 Mobile applications are difficult to write without middleware providing fundamental mobile computing services (viz., reliable asynchronous messaging, data storage and synchronization, disconnected publication and subscription, transcoding data to a format appropriate for a particular device and network connection, and service discovery). Mobile Network Operators (MNOs) need to ensure that Content Partners and Application Developers get a fair share of revenues to stimulate constant development and roll-out of new, innovative and compelling content and services.

9.12 The World Wide Web (WWW) has been designed for static hosts, connected to static networks, which are capable of sending and receiving large amounts of data without significant delays. Mobile phones are becoming more data-centric and evolving into what the industry calls "smart phones", while PDAs are becoming commonplace among business people. The two categories are converging into a new hybrid, providing powerful computer power and a phone in our shirt pocket.

9.13 Mobile Internet Toolkit facilitates creation of different mobile media content via a comprehensive set of editors and wizards. These include Web page creation (editors for creating WML, XHTML, and CSS content), MMS creation (editors for creating MMS with SMIL messages) and Push message creation (editors for creating multipart and SI/SL messages). Mowser is a smart web browser designed to browse the WWW from a mobile host, taking into account, the user's preferences and network limitations. Mowser supports a “many-time, many-

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where” communication paradigm that is suited for a wide variety of information services.

9.14 The Mobile browser (e.g. Nokia Mobile Browser Simulator 4.0) supports browsing mobile Internet content such as XHTML, WML, and WAP Push messages from the Internet or from the local file system. BREW (Binary Runtime Environment for Wireless) is a software platform developed by Qualcomm Inc., for mobile devices. This platform provides an interface between the software applications that run on mobile phones, and mobile hardware and infrastructure system at the back end. Qualcomm has launched BREW as an answer to JAVA, which is also a popular platform for developing mobile applications.

9.15 The Mobile Data Deployment Strategies (2004–2010) Report32 has stated that uptake of advanced handsets and value-added non-voice services were growing and estimated 2006 and beyond would be a period of maturing of 3G technology with penetration levels and service take-up reaching full maturity by 2009 or 2010. Greater bandwidth and speed (4G and 5G) may combine with the base technology that 3G provides driving service take-up forward in leaps and bounds, once the initial mass-market penetration reaches a suitable level. India desires to leapfrog to 4G mobile telephony, according to the Ten Points Agenda of the Union Ministry of Communications and Information Technology released during 2004.

9.16 The domestic market drivers will be applications for the mobile market. Convergence of e-Government with mobile business will stimulate the emergence of “m-Government” in view of public and social pressures, and technological pressures.

32 http://www.portioresearch.com

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Research and Learning focus should be on the fundamentals and theoretical foundations of mobile computing systems, wireless networks, mobile information systems, distributed mobile database systems, and advanced mobile applications.

10. AGMARKNET: Data for Rural Empowerment through

Mobile Computing – A CASE STUDY

10.0 As a step towards to globalisation of agriculture, the Union Ministry of Agriculture has embarked upon an ICT project: NICNET based Agricultural Marketing Information System Network (AGMARKNET)" in the country. This AGMARKNET project has already networked 735 Agricultural Produces Wholesale Markets (APWMs), during 2000-02 and embarked upon additional 2000 Markets during the Tenth Plan Period (2002-2007). The Government initiative of the networking of agricultural produce markets (AGMARKNET33) and the AGMARKNET Portal (Figure-3) would facilitate the development of B2B and B2C e-Commerce Model in the Country (Moni, 2001)34. This project has the potential of expansion to about 7000 Wholesale Markets located through out the country and further to 35000 Rural Markets in India. This ICT Project is a 'farmer-centric" project (Figure-4) to put the progressive farmers on "global free trade zone on Internet".

10.1 AGMARKNET appears to be filling a huge gap by providing access to information at reasonable cost. The AGMARKNET 33 "AGMARKNET: NICNET Based Agricultural Marketing Information System Network - A Sponsored Project of

the Directorate of Marketing and Inspection (Ministry of Agriculture)", February, 2001 and also see http://www.agmarknet.nic.in

34 Moni .M (2001) : “Leveraging Information Technology for development of Agri-Business – Agribusiness : B2B or B2C e-Commerce Model?”, presented at the National Seminar on “Managing Agri-Business in the New Millennium : Challenges and Opportunities”, organised by All India Management Association (AIMA) , 20-21 July 2001, New Delhi

34

venture is a heartening initiative from the much criticized and slow-to-react government, especially on the issue of easing the infrastructural constraints on agriculture (Times of India, 2002)35. The advantages of this database accrue to the farmers, as they are not forced to sell their produce in the nearest market at uneconomical prices. The challenge, if the full potential of such ventures have utilized, is to take IT to rural India in a big way. Constraints/Challenges are (a) connectivity in rural areas, (b) training the stakeholders and (c) ensuring data updation in real time frame (http://www.eapf.net/ casestudies/in/agmarket.asp). Anand Sagar (2003)36 considers AGMARKNET, a step towards "Rural Empowerment" and also "Data for Development". Kari Holland of Washington University (USA)37 categorizes AGMARKNET (India) as follows:-

• Nationwide market information for wholesale produce, • Project supported by various departments and state

boards of agriculture, • Access mainly through the Internet, • Customers pay (some), • Computer facilities at the markets, • Software for download, • Daily market prices, • Information collected by nodes in the various markets, • Weekly trends, • Information on loans, policies and regulations, • Income has increased (for some), and • Bypass middlemen.

35 Times of India : "Website to help farmers bargain better", dated 31st May 2002 36 Anand Sagar K (2003), “Agmarknet-Rural Empowerment: Data for Development”, Geospatial Today, Vol.2 (2), 2003 and also www. Geospatialtoday. Com/ journal/Vol2Issue2 37 Www.cis.washington.edu/courses/pbaf537d

35

Figure-3: A Synoptic View of AGMARKNET Portal

10.3 The Inter-Ministerial task force on Agricultural marketing Reforms (2002) has suggested creating an "Atlas of Agricultural Markets" as well as "e-Commerce" on AGMARKNET Portal so as to enable producers (farmers) directly transact business with the buyers. This Digital Advantage Project has already achieved the followings:-

• "Reaching the Unreached i.e. resource poor farmers", • "reduction of distress sale", • "right to information", • "base for production planning", • "base for marketing led agricultural extension", • "increased competition", • "reduced marketing margins", • "vertical linkages in export crop markets that connect

multinational traders to domestic traders"

The country is now witnessing a unified "agricultural marketing price information system" for the entire country. The general Hypothesis is “the more farmer produces the less he gets” – i.e. not getting adequate returns for his toils. The increasing trend of agricultural production has brought new challenges

36

facing India now lie in positioning her current and future surplus in certain niche markets. This AGMARKNET venture benefits the farming communities from the new global market access opportunities and also strengthened the internal agricultural marketing system in India.

10.4 There have been requests for AGMARKNET venture in various developing countries (ASEAN), Countries in Africa region, etc., in view of its operational efficiency in India. AGMARKNET is an effort to bring rural people into the mainstream economy.

Figure – 4: Farmer and his Stakeholders

Synergetic collaboration among Cooperatives, Agricultural Produce Markets, AGMARKNET, Agri-Clinics, Agri-Business Centres could become the “pathways” to rural prosperity.

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11-January-2005 ICT Initiatives for the Agriculture Sector

45

Solution ArchitectureSolution Architecture

Call Center

Secure Web-based

Access

Secure Web-based Portal

Access

Optimized Mobile Server

(power, net BW, cost)

Secure Wireless Connection (any Web- enabled phone,

SMS)

Local App

Standard Web Serv ice Interface to other Div isions, 3rd Parties

- Highly Scalable - Secure

Optimized Mobile Serv er

Wireless , VSAT, or Low BW Connectiv ity to other Div isions & 3rd

Parties

Figure – 5: AGMARKNET & Mobile Computing Model

11-January-2005 ICT Initiatives for the Agriculture Sector

46

Support for Wireless and LowSupport for Wireless and Low--Bandwidth NetworksBandwidth Networks

Optimized Mobile Server

Web ServiceEnd-Points

Devices with:GSMGPRSSMS

802.11 WiFiDialup Landline

T1VSAT Secure, Reliable, Optimized Channel

• 32% - 83% reduction in power consumption on the mobile device

• 47% - 92% reduction in network bandwidth utilization

• 37% - 58% reduction in usage cost

Figure – 6: AGMARKNET & Mobile Computing Model

10.5 Areas of business that are targeted for improvement through the Enhanced AGMARKNET programme through Mobile Computing Model (Figure-5 & Figure-6) are visualized as follows:-

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• User profiling • Supply chain (Input Supply) • Value Chain • CRM • SME networks • Supplier co-operation

To facilitate data access through Mobile Phone by farmers, traders, different market players, consumers, banks, NGOs researchers etc, the Indian Public Sector Telecom Company (BSNL) has shown its interest to disseminate wholesale markets pricing data on 300 agricultural commodities and their 2000 varieties, being received from more than 1200 APMCs located through out the country, through their Mobile services (Figure-7).

Figure – 7: AGMARKNET Data over BSNL Network through Mobile

Phones

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11. Not enough legal safeguards for B2C transactions under the existing Indian Cyber Law : A Concern

11.0 e-Commerce transactions are primarily based on “trust”, and the “inherent” strengths of the Internet and the IT infrastructure. Secure exchange of monetary value and other items of value, enabling e-commerce through mobile devices, is just one focus of the security research. Though this medium provides an excellent opportunity to reach out to many customers, consumers often face problems with regard to the deficiency of goods or the services rendered. There are also multiple gaps in the current legal and regulatory framework.

11.1 The major drawback of the Information Technology ACT 2000 is that it does not address the concerns of consumers who undertake e-commerce transactions (Pavan Duggal, 2005)38. There is not really any effective remedy under the Indian Cyber law, even though it has the stated objective of promoting e-commerce in India. Therefore one has no option but to fall back upon the provisions of the Consumer Protection Act 1986 [for “deficiency of goods and services” clause]. 11.2 Multiple issues of trust and lack of payment gateways has been another hindrance for adoption of e-Commerce in the country, as there is no security and confidentiality of data (IBC, 2004)39 .

38 Pavan Duggal (2005) : “Not Enough legal safeguards for B2C Transactions”, published in THE ECONOMIC TIMES dated 13 March 2005. 39 IBC (2004): This relates to the Study conducted for FICCI by International Business Consultants (IBC) on e- Commerce opportunities in the RIM Region.

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12. Digital SMEs and its Stakeholders in India

12.0 According to (Frank Wilson, Tony Swash and Stephen Anderson)40, there has been a gap existed between the strategic level of support for business development (regional focus) and the SME level of development (specific business development). It has been further argued in (Wilson and Pardo et al, 2001)41 that the threat of marginalisation faced by SMEs in the increasingly digital economy can be reduced by systematic support for transformation of traditional business approaches, sectors, and networks. Knowledge Management for regional business development may become a more critical issue as the digital economy becomes more established. There are many stakeholders in the Government and International Organisations who can directly involved in development of Digital SMEs in India:

(a) Small Industries Development Organisation (SIDO) (b) UN Asia-Pacific Centre for Transfer of Technology (APCTT) (C) Indian Postal System (IPS) (d) National Informatics Centre (NIC)

(a) Small Industries Development Organisation (SIDO)

12.1 The Small Industries Development Organisation (SIDO)42 of the Ministry of Small Scale Industries (SME) acts as a catalyst of growth of small enterprises in the country, with the focus on 40 Frank Wilson, Tony Swash and Stephen Anderson:”Promoting SM-E-Business through Business Support Networks”; www.usherproject.org.uk 41 Wilson, F., Swash, T., Pardo, A., and Crump, M (2001): “Structured Support for S-M-E-Business”, In Proceedings of Human Factors in Telecommunications-HFT'2001 Conference, Bergen, Norway, 2001. 42 Small Industries Development Organisation (SIDO), India - [www.smallindustryindia.com & dcssi@laghu-udyog.com]

41

providing support in the fields of credit, marketing, technology and infrastructure to SMEs through its organizations.

(b) UN Asia-Pacific Centre for Transfer of Technology (APCTT)

12.2 The UN Asia-Pacific Centre for Transfer of Technology (APCTT) located in New Delhi, India, has been working in the field of technology transfer in Asia for almost 25 years, and facilitates technology transfer negotiations among SMEs, as given below:

• Information on technology/business/investment

opportunities • Matching and pre-selection of prospective business partners • Support services (market/feasibility studies, technology

evaluation, contract negotiation) • Finance syndication (loan, venture capital, grants,

incentives), and • Product marketing

(C) Indian Postal System (IPS)

12.3 The Indian Postal System (IPS) Network has about 1.54 Lakh post offices, out of which, HPOS are 840, and Sub-Post Offices are 25190. The Tenth Five-Year Plan (2002-07) talks about establishing 5,000 Panchayat Sanchar Sewa Kendras (PSSK) for future expansion. Postal organizations are adapting to diversify product portfolios and expanding services into non-traditional areas such as e-banking, e-government and e-commerce. A distribution network that has 155618 post offices, of which 139081 are in rural areas, and a customer base of 160 million account holders in post-office savings banks. India Post

42

gives us a complete national reach and penetration besides being partners in transactions (ICICI Bank, 2003)43.

(d) National Informatics Centre (NIC)

12.4 National Informatics Centre (NIC) has been a prime builder of e-Governance applications in Government Sector and Promoter of digital opportunities for sustainable development. Since its inception in 1977, NIC has been playing an important role of an “active” catalyst and “facilitator” in informatics development programme in Governments at the national, state and district levels, which inter-alia includes:

° Data Warehousing (Data Bases & Model Bases) and Mining

° Network services (Internet, Intranet, & Extranet) ° Geographical Information System (GIS) ° E-Governance & E-Commerce ° Decision Technology System ° Sectoral ICT Plans ° IT Training for Government Employees (i.e.

empowerment) ° Video Conferencing, and ° Total-ICT solution

NIC has institutional linkages through its ICT Network “NICNET”, with all the Departments/Ministries of the Central Government, 28 State Governments, 1 National Capital Territory of Delhi, 6 Union Territories, and about 600 District administrations of India.

43 “Indian Post ushers in a new mail order” published in http://www.rediff.com/ money/2003/mar/08spec.htm

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12.5 State Government Informatics Development Programmes

were launched to overcome “Digital Divide” among Central

Government Departments and State Governments, and District

Government Informatics Programme (DISNIC)44 to overcome

“Digital Divide” in District Administrations during 1985-87.

NICNET based “Community Information Centres (CIC)”45 in

grassroots level (about 487 blocks) in the North Eastern States

(Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,

Nagaland, Tripura, and Sikkim) aim to “boost efficiency and

enhance market integration” through Internet/Intranet for

sustainable regional development.

12.6 During the last 27 years, NIC has implemented many

“network centric” applications software for Programme

implementation in various ministries and departments, using

state-of-the-art software tools. “Reaching-Out-Into” and

“Reaching-the-Unreached” Concepts were experimented and

made operational by NIC through its various ICT Diffusion

Projects (DISNIC Programme), since 1986-87 onwards, through

its 596 NICNET nodes located in district headquarters, even

before the INTERNET Technology was introduced in this

44 Moni,M & Vijayaditya,N (1990) : “DISNIC – A NICNET Based District Government Informatics Programme in India”, presented at Indian Computing Congress, held in December, 1990 at Hyderabad, India. 45 Ministry of Information Technology : “Community Information Centre” project, Government of India, 2000

44

Country. During 1980s and early part of 1990s, the policy thrust

was on creating a “decision support system” for development

planning and responsive administration in governments (i.e. an

earlier version of the present day “e-Governance”).

12.7 NIC has vast core expertise and experience in the design,

development and operationalisation of various e-Government

projects in the areas of Public Administration and Governance

viz., Agriculture & Food, Animal Husbandry, Fisheries, Forestry &

Environment, Industry, Health, Education, Budget and Treasury,

Fiscal Resources, Transport, Water Resources, Court

Management, Rural Development, Land Records and Property

registration, Culture & Tourism, Import & Exports facilitation,

Social Welfare Services, Micro-level Planning etc. Some of the

successful ICT Diffusion projects in the areas of Public

Administration and Governance are as follows:-

•• TTeecchhnnoollooggyy ffaacciilliittaatteess SSppeeeeddyy CCoouurrtt CCaasseess TTrriiaallss““ -- AA ssuucccceessssffuull EExxppeerriimmeenntt tthhrroouugghh VViiddeeoo CCoonnffeerreenncciinngg bbeettwweeeenn tthhee JJaaiill aanndd tthhee CCoouurrtt,, wwhheerreeiinn tthhee UUnnddeerr--ttrriiaall iiss iinn tthhee JJaaiill CCoommpplleexx aanndd tthhee JJuuddggee hheeaarrss tthhee uunnddeerr--ttrriiaall ssiittttiinngg iinn tthhee CCoouurrtt.. TThhiiss tteecchhnnoollooggyy ddrriivveenn pprroocceessss hhaass bbeeeenn eexxppeerriieenncceedd iinn tthhee SSttaattee ooff BBiihhaarr;;

•• ““RReeddrreessss ooff PPuubblliicc GGrriieevvaanncceess”” -- AAnn OOnnggooiinngg EEvveenntt ooff tthhee CChhhhaattttiissggaarrhh GGoovveerrnnmmeenntt oovveerr NNIICCNNEETT

•• IITT iinn IInnddiiaann CCoouurrttss -- AA llaannddmmaarrkk pprroojjeecctt ccoovveerriinngg tthhee SSuupprreemmee CCoouurrtt,, HHiigghh CCoouurrttss aanndd DDiissttrriicctt CCoouurrttss iinn IInnddiiaa;;

45

•• AAGGMMAARRKKNNEETT -- AA sstteepp ttoowwaarrddss gglloobbaalliissaattiioonn ooff IInnddiiaann AAggrriiccuullttuurree -- NNeettwwoorrkkiinngg ooff AAggrriiccuullttuurraall PPrroodduuccee WWhhoolleessaallee MMaarrkkeettss ((AAPPWWMMss)) ffoorr ddiisssseemmiinnaattiioonn ooff AAggrriiccuullttuurraall PPrroodduucceess MMaarrkkeett pprriicceess iinnffoorrmmaattiioonn -- 773355 AAPPWWMMss bbyy MMaarrcchh 22000022,, aanndd aaddddiittiioonnaall 22000000 AAPPWWMMss dduurriinngg 22000022--0077;; RRooaadd MMaapp iiss ttoo nneettwwoorrkk 77000000 AAPPWWMMss aanndd aabboouutt 3322000000 RRuurraall mmaarrkkeettss ttoo eemmppoowweerr aaggrriiccuullttuurraall aanndd rruurraall mmiiccrroo--eenntteerrpprriisseess;;

•• SSTTAAMMIINNAA,, TTAACCKKIISS && MMUUDDRRAA -- SSuucccceessss ssttoorriieess oonn ssaalleess TTaaxx AAddmmiinniissttrraattiioonn iinn SSttaatteess

•• RRuurraallSSoofftt -- IICCTT iinn PPoovveerrttyy AAlllleevviiaattiioonn SScchheemmeess MMoonniittoorriinngg PPrrooggrraammmmee

•• CCOOIINN –– CCooooppeerraattiivvee BBaannkk MMaannaaggeemmeenntt SSooffttwwaarree •• SSMMAARRTT NNaaggaarrppaalliikkaa –– AAnn IICCTT ffrraammeewwoorrkk ffoorr eeffffeeccttiivvee

ffuunnccttiioonniinngg ooff MMuunniicciippaall AAddmmiinniissttrraattiioonnss •• EE--PPaanncchhaayyaatt –– AA SSmmaarrtt VViillllaaggee IICCTT FFrraammeewwoorrkk •• IITT TTrraaiinniinngg -- AA KKeeyy ttoo BBuussiinneessss PPrroocceessss RRee--EEnnggiinneeeerriinngg •• IITT iinn EEnnvviirroonnmmeenntt -- AA sstteepp ttoowwaarrddss EEnnvviirroonnmmeenntt SSeeccuurriittyy •• PPaassssppoorrtt sseerrvviicceess -- TToowwaarrddss ee--PPaassssppoorrtt ffoorr IInnddiiaann CCiittiizzeenn •• EEDDII sseerrvviicceess iinn IInnddiiaann CCuussttoommss aanndd DDGGFFTT-- aa rreeaalliittyy iinn IInnddiiaa •• SSEERRMMOONN –– AAnn IInnttrraanneett ssoolluuttiioonnss ffoorr tthhee CCeennttrraall EExxcciissee

RReevveennuuee CCoolllleeccttiioonn •• IITT && RRooaadd TTrraannssppoorrtt -- AA SSMMAARRTT RReevvoolluuttiioonn iinn IInnddiiaa::

SSAARRAATTHHII && VVAAHHAANN •• CCeennttrraall CCiivviill PPeennssiioonn -- AAuutthhoorriizzaattiioonn tthhrroouugghh 3322550000 PPuubblliicc

SSeeccttoorr BBaannkk bbrraanncchheess •• PPrrooppeerrttyy RReeggiissttrraattiioonn –– CCAARRDD,, SSTTAARR,, PPEEAARRLL,, CCOORRDD,, HHAARRIISS,,

PPRRIISSMM •• LLaanndd RReeccoorrddss CCoommppuutteerriizzaattiioonn –– BBHHOOOOMMII,, BBHHUUMMII,,

TTAAMMIILLNNIILLAAMM,, BBhhoooolleekkhh,, HHIIMMBBHHOOOOMMII,, BBHHUUIIYYAA,, AAPPKKAAKKhhaattaa,, DDHHAARRNNII,, eettcc

•• UUttiilliittyy MMaappppiinngg ooff DDeellhhii -- AA TTooooll ffoorr SSppaattiiaall PPllaannnniinngg iinn DDeellhhii •• WWAARRAANNAA NNaaggaarr EExxppeerriimmeenntt -- AA WWiirreedd VViillllaaggee && PPRRAAVVAARRAA

““SSeellff--HHeellpp”” MMoovveemmeenntt.. •• EE--GGrraanntthhaallaayyaa –– AA DDiiggiittaall AAggeennddaa ffoorr LLiibbrraarryy AAuuttoommaattiioonn

aanndd NNeettwwoorrkkiinngg ttoo uusshheerr iinn ““IInnddiiaa aa KKnnoowwlleeddggee SSoocciieettyy””.. •• BBuuddggeett aanndd TTrreeaassuurryy CCoommppuutteerriissaattiioonn PPrrooggrraammmmee •• RRuurraall BBaazzaaaarr -- ee--CCoommmmeerrccee ffoorr RRuurraall MMiiccrroo EEnntteerrpprriisseess

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•• CCoommmmuunniittyy IInnffoorrmmaattiioonn CCeennttrree ((CCIICC)) -- aaiimmiinngg aatt eeccoonnoommiicc,, ssoocciiaall aanndd ccuullttuurraall ddeevveellooppmmeenntt ooff ““rruurraall”” aanndd ""rreemmoottee"" rreeggiioonnss ooff tthhee CCoouunnttrryy ((NNoorrtthh EEaasstteerrnn RReeggiioonn aanndd SSttaattee ooff SSiikkkkiimm))

•• DDAACCNNEETT –– AAnn ee--GGoovveerrnnmmeenntt PPrroojjeecctt ffoorr tthhee DDeeppaarrttmmeenntt ooff AAggrriiccuullttuurree && CCooooppeerraattiioonn ooff tthhee UUnniioonn GGoovveerrnnmmeenntt

•• eennRRiicchh –– AA ccoollllaabboorraattiivvee IICCTT FFrraammeewwoorrkk PPrroodduucctt ooff UUNNEESSCCOO aanndd NNIICC

•• SSmmaarrtt CCaarrdd TTeecchhnnoollooggyy ffoorr ee--GGoovveerrnnmmeenntt aapppplliiccaattiioonnss •• CCoollllaabbCCAADD –– AAnn OOppeennSSoouurrccee CCoommppuutteerr AAiiddeedd DDeessiiggnn PPaacckkaaggee •• GGrraammSSaammppaarrkk –– AA GGIISS--bbaasseedd ssoocciiaall sseeccttoorr pprroojjeeccttss

iimmpplleemmeennttaattiioonn •• DDIISSNNIICC –– AA DDiissttrriicctt GGoovveerrnnmmeenntt IInnffoorrmmaattiiccss DDeevveellooppmmeenntt

PPrrooggrraammmmee && DDIISSNNIICC--PPLLAANN :: AAnn IInnffoorrmmaattiiccss BBlluueepprriinntt ffoorr ggrraassssrroooottss ddeevveellooppmmeenntt

•• IInnttrraaNNIICC -- ffaacciilliittaattiinngg ee--OOrrggaanniissaattiioonn –– aappppeeaarrss iinn wwwwww..mmiiccrroossoofftt..ccoomm aass aa ccaassee ssttuuddyy

Synergetic Collaborative Relationship

12.8 A synergetic collaborative relationship among SIDO, APCTT, Indian Postal System (IPS), Software Technology parks of India (STPI) and NIC can invigorate SMEs in India, through Value Chain, transfer of technologies, and utilise their IPRs. This will also facilitate SMEs to access both national and international business networks and emerge as “digital SMEs”.

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