Summers excited about Indian IT firms

Summers excited about Indian IT firms
REUTERS

BANGALORE, January 19: The United States Treasury Secretary Lawrence Summers dropped tie and jacket on Wednesday to take a first-hand look at India's most bustling economic sector, the fledgling information technology industry. Taking time out from a hectic week-long tour of Asia, Summers paid a brief visit to the headquarters of India's leading software firm, Infosys Technologies Ltd. Infosys became the first Indian firm to list on a US exchange through its American Depository Receipts in March last year. Last week, the firm announced an 84 per cent jump in third quarter profits.

Summers took a tour of the sprawling company campus in the outskirts of this southern Indian city and addressed the firm's 2,000 employees there. "It's very exciting to be here and see the future," he said. "I assure you that the United States wants very much to be your partner and India's partner."Summers, who earlier in the week visited Bombay and New Delhi for talks with government officials ahead of US President Bill Clinton'sexpected visit later this year, has held out India's blossoming information technology sector as an example for successful economic development.

But he has also noted that much of the rest of India's economy remains shielded by high tariffs and bogged down by steep tax rates. He also called for more stringent efforts to reign in the ballooning government deficit, which he said was crowding out much-needed private investment.

Summers said India could achieve growth rates of as high as 10 per cent in the next few years if it managed to step up the pace of reforms and opened up its sheltered economy to the rest of the world.

Infosys, like other information technology firms in what is seen as India's hottest economic region, has flourished by taking advantage of India's cheap labour force to offer software services to firms around the world. While much of the country's more conventional industry remains hampered by outdated infrastructure and an often bloated bureaucracy, the software sector has managed tobypass many of those obstacles.

"This industry works because we're not dependent on the local infrastructure," said Mohandas Pai, the company's chief financial officer.Infosys operates its own power plant - a necessity in a country where power outages are part of daily life - and communicates with the rest of the world via satellite rather than through India's overburdened phone system.

Summers was due to depart India later on Wednesday for a one-day visit to Indonesia. Later in the week, he was expected in Tokyo, where he will attend a meeting of finance ministers and central bankers from the world's top industrial nations on Saturday.