In an exclusive interview with SME Times, Ramesh A Vaswani, Executive Vice Chairman, Intex Technologies Ltd, said SMEs in IT hardware space can reap benefits when there is increase in demand in the rural areas, which can only happen if the government gives priority in developing infrastructure, proper allocations of funds, power supply and proper training in IT literacy.

Excerpts of the interview...

What are the benefits you have witnessed from Budget 2010-11?
Ramesh A Vaswani: I don't think there are very great benefits for the small and medium enterprises (SMEs). But I feel that indirect benefits will come to SMEs through the accelerated growth with the increase in rural demand. However, based on that the government has announced, various allocations of funds for rural development schemes, which further would help in inclusive growth. I think this will benefit enterprises across the spectrum.

How is demand picking up at the moment in the IT sector?
Ramesh A Vaswani: We are a supplier of IT hardware within India. As far as computers are concerned, currently the demand for Personal Computers (PCs) is of around 5-6 lacs per month, which I feel is very low for a nation like ours.

Were the industry's requirements addressed in the recent Budget 2010-11?
Ramesh A Vaswani: The IT infrastructure and IT literacy contribute directly to the GDP growth in India. I think this should have been addressed in this Budget. Some priority sector lending directives should have been given to the banks in order to ensure that people who want to buy a computer in the country are able to get small loans at concessional rates of interests.

The country today has already moved away from an agricultural economy to a service-based economy. We continue to provide inputs for agriculture because we feel that the rural population can accelerate in terms of inclusive growth.

What were your expectations from the budget?
Ramesh A Vaswani: I feel more inputs were need to be provided in a more focused manner for IT literacy and IT infrastructure. Agriculture is no longer the only priority sector in the rural areas which is going to contribute to inclusive growth of the country. If we address the digital device that also helps in achieving inclusive growth.

I am not saying that you should remove the focus from agriculture. That is excellent. But more focus should be given on IT literacy and infrastructure development.

I had expected that some schemes should have been announced for increasing the domestic demand for computers. On the other hand, excise duties have been increased on computers, which will hike the prices of the computers in future.

What is your appeal to the government after the budget?
Ramesh A Vaswani: I would like to see total exemption of excise duties on computers. Earlier, from 12 percent it was roll backed to 8 percent and now it is again 10 percent with a two percent hike in excise duty.

When the excise duty was around 8 percent, we saw an increase in demand. The increase was there is terms of growth as compared to last year. Right now, what is happening is that the rate of growth is declining whereas IT is such an important field for further development in this country. In that case, the rate of growth should actually get accelerated.

What is the reason behind the decline in demand?
Ramesh A Vaswani: The reason behind the decline of growth is because of no sufficient encouragement from the government to increase the demand for PCs. Today every school child in the semi-urban and rural areas does not have access to computers. In some countries it is mandatory for every school to have access to Internet. We are still a long way to reach there. What I am trying to say is that we must take certain positive steps.

You will be amazed to know that there was a village in India where a single computer was installed and within a matter of 10 days a large chunk of youngsters learned, on their own, how to use the computer. There is potential and scope, but the only thing which is missing is the penetration of new markets.

What are the challenges in IT hardware business in the rural areas?
Ramesh A Vaswani: The challenges are proper training institutes and infrastructure support. We need power and we need broadband in the rural areas. These should be given special emphasis. And, then for the local people to buy computers there have to be priority sector lending schemes through lead banks. There was a time when the leading banks were identified to give loans for agricultural functions. I do not know whether those schemes will prevail. Banks status should be identified for giving loans for computers too. It should be a movement all across the country.