LIMITS TO INNOVATION SET BY STRONG EXPORT ORIENTATION The Case of India's Information and Communication Technologies Sector

The present paper examined following issues with respect to India's ICT sector; What has been the innovative strategy of firms under export orientation? Have the policy measures and the institutional interventions undertaken in the 1990's been instrumental in fostering an innovation based comparative advantage for the Indian ICT software and services industry? What have been the implications of the observed innovative behavior (or lack of it) on the structure of exports and the net export earning capability? And what new or additional policies are to be adopted to foster India's innovation based comparative advantage in ICT We have argued that the international competitiveness and credibility, if any, that the ICT and software service sector has been able to establish over the years have not fallen like" manna from the heaven" or the handiwork of prophet of market. We have also made a critical examination of the available database on the Indian ICT and software services industry. We found that the process of the withdrawal of the state from almost al economic activities has also included data generation and distribution. As result we are ending up in a situation where the most widely used data base is the one supplied by the NASSCOM. Yet this data base involves substantial overestimation of exports. The innovative behavior of firms under export orientation has been one wherein firms have depended heavily of collaboration with foreign firms. Similar to exports, there has been very high regional concentration with the US accounting for about 50 per cent of total number of foreign collaborations and FDI. While the NRIs accounted for over 17 per cent of the number collaborations, their share in total FDI was negligible and 1 The corresponding author K J Joseph E mail [email protected]