Path to Development, Section 02

Now that Rajiv was prime minister, I thought it would make sense to give him a brief on C-DOT’s progress. He had been a huge help in getting the project off the ground; I knew he was genuinely invested in it. But I wanted to show him exactly what we were doing. No laypersons understood what a digital switch was or what a 128-line or a 256-line rural exchange might be. RAXs (rural automatic exchanges) and PBXs—it was all Greek to them. What did the thing look like? How big was it? What did it actually do?

‘I can have a demonstration for you outside your office,’ I said.

‘Excellent,’ said Rajiv. ‘Set it up.’

The excitement at C-DOT could hardly be described in words. ‘The PM wants to see our design?’ ‘The PM is interested in what we’re doing?’ The kids were absolutely over the moon.

On the given day a small team of our youngsters set up the exchange near Rajiv’s office. I went in to meet with him first. When we walked out, six or seven of the C-DOT engineers were standing there with the equipment. From the outside the switches looked like nondescript metal cabinets. But the insides were a complex array of printed circuit cards with microprocessors, software, electronic components, ports, links, buffers, backup power sources and other elements that made these devices among the world’s most intricate machines.

Rajiv shook hands with all of the C-DOT youngsters. One of them said to me afterwards, ‘I’m not washing my hand for a month now.’

The switch prototypes we demonstrated for Rajiv Gandhi were the skeleton of the 128-line and 256-line exchanges designed for rural use. We had promised the government a family of switches from 128 lines for rural use to 40,000 lines for urban areas. My plan was to design every component of the small exchanges so that we could incorporate them as modules into the larger exchanges. We’d be using the same cards, processors and software. Everything was modular, flexible, expandable, scalable—and affordable.

But we wanted to start with the smallest exchanges, which we intended to install in rural villages. I wanted people in these small, remote places to be able to easily call their relatives and friends living in other places; I wanted to give small business owners the ability to connect with their customers and suppliers elsewhere, so that they could expand and build their businesses—none of which was possible with the current generation of scarce and unworkable phones. Villagers, the vast majority of the population, were isolated in stagnant social and economic enclaves. I intended to break them free from their barriers and connect them with each other and the rest of the world.

All over the globe, higher growth has been correlated with increased telephone density. The general wisdom was that if you were rich, you had a lot of telephones, and the corollary was that if you had lots of telephones, you were bound to be rich. In the industry of telecommunications, the prevailing wisdom was to start with the dense rich areas and work your way outwards.

I had a different view. My approach, which I talked about in every forum possible, was to not worry about telephone densityin developing countries like India, but to focus on accessinstead. Telephone density in the cities is not going to touch life in the villages, which is where India’s challenge lies. We needed to worry instead about improving access to telephones for everybody.

That, in essence, meant public phones. I wanted to make phones available to rural people, the village dwellers. Don’t give a phone to the rich man for his and his family’s personal use. Instead, put it in a shop or a pharmacy or a school or a bus station. Put it on the street, somewhere where ordinary people can use it.

But whenever I talked about public access, people thought immediately of the Western-style coin-operated public phones. I constantly heard things like, You can’t have a coin-operated phone; the people won’t have coins; they’ll be vandalized; you won’t be able to maintain them.

But I wasn’t thinking of coin-operated phones. ‘Coin-operated phones are the Western model,’ I would say. ‘They’re expensive to make, they’re expensive to install, they’re expensive to maintain. That’s not what I want. What I want are public phones operated by a phone manager or phone entrepreneur. Give phones to an unemployed person or a disabled person. Set up a table in a tea shop. People will come to make calls. The telephone will generate a receipt for each call. The users will pay the phone person. The phone person will pay a fee to the phone company and keep the rest.’ Ultimately, these public telephones came to be known as Subscriber Trunk Dialing/Public Call Offices—or STD/PCOs—set up with yellow signs all over the country for people to make calls anywhere without having to own a telephone. The public telephones created roughly 2 million new jobs in the country and provided livelihood to many families, especially the underprivileged and the handicapped. They also connected every corner in India to each other and to the rest of the world.

Because of these public telephones and their clear utility for common people, it became easier to privatize the telecom industry in India in 1994. But we weren’t thinking of industrial progress at that time. We were thinking about connecting India from the bottom-up.

Our engineers understood this concept and were committed to delivering a phone system that would satisfy local Indian needs and assure access. Together, we designed small 128-line exchanges that incorporated the most sophisticated technology, but we ruggedized them for local conditions. They were humidity-, dust- and monsoon-proof. They did not require air conditioning, which necessitated a design breakthrough since switches built for high-temperature and high-humidity environments invariably needed air conditioning. Beyond that, the Indian electrical grid was notoriously undependable; we couldn’t have the switches overheating every time the power failed.

Our answer to the heat problem was, first, to use low-powered microprocessors. That meant the switches were a little slower than the standard commercial switches, but in our circumstances that was irrelevant. Then we gave more space to the various components and configured them differently from what was standard in order to increase the so-called ‘vertical chimney’ effect, which would efficiently dissipate the heat from the microprocessors. Our switches weren’t sleek, they were bulkier than they might have been. But I wasn’t concerned about aesthetics. I just wanted them to work in a hostile Indian environment with dust, humidity and heat, and without air conditioning.

From the beginning I had several objectives for C-DOT. The first, of course, was to design and build switches. For C-DOT itself I had selected recently graduated engineers—our average age was twenty-three. I did this in order to get people who hadn’t been conditioned yet by the system, into the system. But I had a second goal in mind too. Indian schools were producing wonderful engineers—as good as any in the world. But, typically, these young people looked overseas for employment. Engineering jobs in the US and Europe were far more attractive and lucrative than jobs in India. The West was where the action and the opportunities were. It was an example of the brain drain. My second objective for C-DOT was that it would keep many of these smart, young people inIndia. C-DOT and its inevitable spillovers would nurture our native hardware and software talent and provide a home for them. From the beginning I had thought of C-DOT as a catalyst, or at least a model, for high-tech growth in India generally.

Another objective was regarding the manufacturing front. I talked a great deal about indigenous production, how India could build its own telecom system instead of spending cash reserves on imports from multinationals. As we made progress on switch designs in Delhi and Bangalore, I began organizing the manufacturing effort.

The first step was to enlist people and companies to build the equipment. To do this I called a conference in Delhi where we presented our manufacturing plans and announced that manufacturing licenses would be available for a fee of 4 lakh rupees. There was more than a little opposition to this approach; it seemed to some a random and overly casual way to build a manufacturing base. ‘Sir,’ I heard, ‘this is not possible. How can you let just everybody get a license?’ My idea was to build multiple manufacturing capabilities for telecom equipment and train a large number of people at various locations in the private sector.

My answer to that was, ‘Why not? They’re paying 4 lakh rupees, let themworry about it.’ That might have sounded a little flippant. But the fact was that no one in India had ever manufactured telecom equipment privately. So it wasn’t as if we had a group of experienced manufacturers to choose from. No one in India had ever produced telecom transformers. (Eventually, I had to send someone from the US to teach them.) No one had ever made connectors before, no one had fabricated serving boards or electronic racks. We were going to have to build an entire industry of manufacturers and vendors from nothing.

When I invited potential producers in to buy licenses, I knew that the licensees would be novices in telecom manufacturing. But I had lined up ancillary industries that would provide materials and components. I would direct the manufacturers to these sources. I would teach them how to fabricate and how to assemble to the required specifications. I would teach them how to test. My plan was to create a new native Indian industry from the ground up.

So, in a sense, the process was random, but I was certain the incentives would generate the necessary interest and, eventually, the necessary manufacturing expertise. Which is what happened, sometimes, in unexpected ways. One day at the Hyderabad airport a young man came up to me. ‘Mr Pitroda, I’ve read about you, you’re doing wonderful things. I’m a mechanical engineer. Do you think I could do something?’ I happened to have a connector in my pocket, a telephone jack—a dime a dozen in America, but hard to come by in India. ‘Here,’ I said, ‘make this in India. Go to the US, figure it out.’ Six months later he was making connectors.

At the Delhi licensing meeting, forty-eight people came forward to buy manufacturing licenses. Forty-eight was too many, I knew that. More than a few of them were bound to not have the resources or ability. Inevitably, some were going to fail.

But this kind of entrepreneurial risk-taking was not part of the culture, particularly in government-sponsored industries. People in the administration said, ‘How can you talk openly about people failing? It’s absolutely not acceptable.’

My answer was that we had to accept it. ‘The fact is that some of them are going to fail. There’s nothing to do about it. Failure is a part of life, and a precondition for success. It is okay for failures to happen.’

That caused some consternation. Ever since Jawaharlal Nehru, India had embraced a command-driven, socialistically oriented economy. Privatization of this sort was a new idea, a different kind of culture. The expectation of failure sounded harsh, even unsavory. It smacked of cruel, crass American capitalism. ‘It’s okay to fail,’ I said. That might have seemed blunt and unsympathetic, but it was the truth.

I had envisioned that we would be creating a sizeable industrial base, but I think the scope of it wasn’t immediately evident to almost anyone. Even Rajiv Gandhi himself wasn’t aware of the extent of what all was happening. But he had implicit trust that I would be able to manage, and I didn’t want to burden him with anything that wasn’t absolutely necessary. ‘The best thing I can do is give you the gift of time,’ I told him. I didn’t want to come to him with a set of problems for him to solve. I wanted to solve them for him. As prime minister he was bombarded by the problems of the world. I didn’t want to add to that. Why am I your friend if I’m going to add to your burdens? I’m not going to give you problems. I’m going to relieve you of problems. That’s my job.That’s what I thought.

That was my attitude. Rajiv liked that. I made no demands. I never asked for any favours. And there weren’t many people around him who didn’t want something. My intention was that whatever time we spent together should be time saved for interesting and innovative ideas. I wanted him to feel good with me, not look at me as someone who needed to be managed.

He and I both experienced that most people in India take thirty minutes to deliver a thirty-second message. The real message normally comes at the end of the meeting, and people invariably have a hidden agenda.

Once the manufacturing licenses were awarded our engineers got even more excited. It wasn’t abstract designs, systems and algorithms any more. They could sense that things were beginning to come to fruition. Some of the teams moved into a new phase, creating plans and teaching tools for the manufacturers to use. We prepared forty-eight sets of drawings. We set up a training room. We made videotapes demonstrating assembly methods. We trained the engineers to use the testing equipment.

All this had to be done on the fast track. Everyone understood what was at stake and that we needed to work as hard and in as disciplined a manner as we were capable of. People had been working hard before, but now it seemed as if the place had gone into overdrive. The young engineers were putting in twelve-hour days, some far more. They took pride in it; they felt totally committed. If someone needed to fly from Bangalore to Delhi to solve some problem, they just did it. I told them, ‘Don’t wait for permission. Do it. When I see it, I’ll sign it. I’ll backdate it. If you have work to do, don’t wait for permission—do it. Do you have to go to the US to figure out how to fix something? Go. Don’t worry about junk, about irrelevancies. Just get the work done.’