Projects worth over Rs 70,000 crore to upgrade technology have been kickstarted in the country.
The e-governance projects recently initiated by the Central and state governments have brought some cheer for small and medium enterprises (SMEs) in the IT/ITeS segment, that have been hit by the ongoing downturn. Industry sources say that over Rs 70,000 crore worth of projects, including e-governance and technology upgrades by various public sector entities, have been kick-started in the country.
If 10 per cent is reserved for SMEs it would make a big difference to them, said Arun Ram, a member of the Tamil Nadu government’s IT & Communications Task Force. A few state governments— such as Tamil Nadu, Andhra Pradesh and Gujarat— have started allocating such projects to SMEs. To make others follow suit, the Federation of Indian Chambers of Commerce and Industry (Ficci) is planning to ask the government to reserve some e-governance projects for SMEs.
Ram, who is chairman of the Chennai-based Valingro Group, and a member of Ficci’s executive committee, said the government’s unique identity project is a Rs 40,000 crore programme, apart from which the Central and state governments are expected to spend around $10 billion over the next five years on e-governance projects and on upgrading their technology. Of this, India Post, Indian Railways, Life Insurance Corporation and other state entities alone are expected to spend $6 billion.
These projects — especially the e-governance projects — offer “tremendous” opportunities for SMEs, said Arun.
According to UNESCO, e-governance refers to the public sector’s use of information and communication technologies to improve information and service delivery, encourage citizen participation in the decision-making process and make government more accountable, transparent and effective.
The Central government launched the National e-Governance Plan (‘NeGP’) on May 18, 2006. The three pillars of the plan are connectivity (statewide area networks), data centres (National Data Bank, State Data Centres) and Common Service Centres, according to e-Governance 2020, a Ficci-Ernst Young report on emerging themes for e-Governance in India.The total cost of the NeGP until 2011 is estimated at Rs 23,000 crore. The outlays for its components are: Rs 1,623 crore for state data centres, Rs 313 crore for the capacity building scheme, Rs 3,334 crore for statewide area networks, and Rs 5,742 crore for the common service centres scheme (CSCS).
The participation of SMEs in these projects will not only be cost-effective, it will also generate more employment opportunities. For instance, the CSCS would boost employment and entrepreneurship in rural areas. Tamil Nadu is currently setting up such centres across the state’s rural parts. Through these centres citizens can purchase railway tickets, pay public utility bills, obtain housing documents and access any government services meant for the common citizen. The state is expected to set up 5,200 such centres.
Tamil Nadu is also executing several e-governance projects and upgrading technology in various departments through the Electronic Corporation of Tamil Nadu (ELCOT). The state’s IT Secretary, P W C Davidar, said 15 per cent of these projects have been taken up by SMEs. For instance, the state’s employment exchange has been redesigned by a SME. The state government is also planning to introduce a smart card system in its regional transport offices (RTOs).
Companies like Ascenders Technologies, a Chennai-based IT services firm, have come out with new solutions for such initiatives. T Thirugnanam, a director of Ascenders Technologies, said SME products are 30 per cent cheaper than those of larger companies. The company has introduced smart cards for RTOs, health care providers and education institutions.
“While we (SMEs) are able to offer better solutions at better prices, we are not able to participate in government projects because of the revenue floor that keeps SMEs away from the tender process,” Thirugnanam said. (The TN government allows only companies with annual revenues of at least Rs 50 crore to participate in government projects. SMEs want the revenue floor to be set at half of the total project cost.)
To address this issue FICCI is planning to recommend to the government that a portion of e-governance projects should be reserved for SMEs, said Arun. The chamber is also planning to create a consortium of SMEs which would allow them to bid for projects and compete with big companies.
