India was keen to retain, and not evict, IBM in 1977: Book (With Image)

March 19th, 2009 - 11:39 am ICT by IANS  

By Arvind Padmanabhan
New Delhi, March 19 (IANS) Contrary to the general perception that India had forced US IT giant IBM to exit the country in 1977, evidence shows that the government was not only keen to retain the company but had also held secret parleys for that with the company’s top brass in the US, says a new book.

The closed-door talks with IBM were piloted by the then Electronics Commission led by senior technocrat N. Seshagiri, says the detailed account of the IBM era in the book, entitled “The Long Revolution: The Birth and Growth of India’s IT Industry”.

Authored by senior science and technology writer Dinesh C. Sharma, the book says there was a stalemate in the official talks with IBM India to recast its Indian operations to fall in line with a new law - the Foreign Exchange Regulation Act.

It was for this reason that the chairman of the Electronics Commission and secretary in the Department of Electronics, M.G.K. Menon, had deputed Seshagiri to open an informal dialogue with IBM top brass in America.

“Aware of the unfavourable political ambience, Menon did not want this to be leaked, as it could have led to criticism within and outside the government,” says Sharma, whose book, published by Harper Collins, is to be released Friday by Knowledge Commission Chairman Sam Pitroda.

The book names two officials of IBM India who were deputed by its finance department - N. Panchapakesan and Raymond Pillai - along with another senior manager, Dan Gupta, for discussions with Seshagiri.

Under a compromise formula proposed by Seshagiri, IBM could have remained in India and at the same time the Indian government could have stuck to the provisions of the new legislation.

The Indian official, who was invited to participate in a meeting at the UN headquarters in New York, used the opportunity to meet the president of IBM for Americas and Far East, along with other senior officials there.

They liked the compromise formula, but the situation changed in a follow-up meeting in New Delhi. The general manager of IBM India surprised Menon and Seshagiri by sticking to the earlier stand of “no dilution of equity” taken by the company all along.

This was, in fact, contrary to what his bosses in New York had proposed to Seshagiri, supporting the government’s idea.

The book also demolishes the notion projected by western commentators that the Indian government was unnecessarily inflexible while dealing with IBM and that by rejecting its proposals India had lost the opportunity in an emerging area of technology.

The disclosures about efforts made by the government to arrive at a solution, while maintaining a tough public posture, show that India was actually not inflexible and was willing to accommodate the US giant’s concerns.

“The top management of IBM also understood the Indian government’s stand,” says Sharma.

The book also has a detailed account of how IBM was importing outdated and used mainframes, refurbishing them in India and leasing the same to Indian customers at exorbitant rates.

(Arvind Padmanabhan can be contacted at

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