Tech Companies: Why in India and not in Pakistan

Many of you must have wondered that Pakistan and India shared a common colonial past and started off with a largely similar nature of tragic history but why we still see a noticeable divergence in their economic fortunes? Both nations achieved independence in 1947, however when we talk about the advancements, India is undoubtedly considerable advanced on all indicators of economic sustenance, resource endowment, technological progressions, potential output and growth.

The last two decades or so have been of the increasing importance of technological advancements in developing countries. India played smart enough and grabbed the opportunities with both hands to secure foreign investment. As India increasingly opened its economy to foreign direct investment (FDI), one of its principal objectives was to achieve technology transfer from foreign firms to country’s firms. According to report prepared by GSMA & Boston Consulting Group (BCG), the Indian mobile economy has grown rapidly contributing significantly to India’s gross domestic product (GDP).

Tech Companies: Why in India and not in Pakistan

Pakistan has always stood at the bottom when it comes to providing a stable and healthy environment for businesses. According to the Economist Intelligence Unit (EIU) survey in 2014, Pakistan was ranked 74 out of the 82 countries in being the most business-friendly economy.

Pakistan has always stood at the bottom when it comes to providing a stable and healthy environment for businesses. According to the Economist Intelligence Unit (EIU) survey in 2014, Pakistan was ranked 74 out of the 82 countries in being the most business-friendly economy

Those remaining 8 that ranked lower than Pakistan were countries with grave socio-political unrest and a collapse of market economy resulting from the State’s undue interference in commerce.

Whereas, India has registered strong growth in the past decade and half. International Data Corporation (IDC) predicts India to overtake US by 2017 and also that it would maintain high growth rate over the next few years as people will upgrade to 4G. Let’s focus on some ground realities that have made India world’s second-largest IT and telecommunications market.

One of the major reasons is the educational uplift of the country. India’s technological achievements after independence can be divided into two distinct phases. The first phase that covers the period 1947-90; where Pandit Nehru had the vision to invest in education and established several premier institutions of higher education, science and technology in the country. The second phase starts from 1991 when Indian PM, Manmohan Singh drove a major program of liberalization of the economy by demising the license raj and since then the Indian government has removed the Foreign Direct Investment (FDI) cap on telecom investment. India has been creating a future-ready digital workforce, with more than 150,000 and more employees with SMAC (social, mobility, analytics, and cloud) skills. The SMAC market is expected to grow to more than USD 225 Billion by 2020.

India has already marked its presence as one of the fastest growing economies of the world. It has also been ranked among the top 3 attractive destinations for inbound investments

On the one hand, we can see that the leadership was keen towards the development of the country, they understood the importance of international investment in the country and started working on it from long past. Indian government not only focused on simple purchase of foreign technology but also for the presence of foreign firms. On the other hand, Pakistani government’s largest setback has been the neglect of human development in the country. Had investment in education been up to the level of neighboring East Asian Countries and the population growth rate reduced from 3% to 2%, the country would have been standing on a different platform.

Haier will be the first Tech company to set up its manufacturing plant in Pakistan

India has already marked its presence as one of the fastest growing economies of the world. It has also been ranked among the top 3 attractive destinations for inbound investments. Companies like Samsung, Motorola, Xiaomi, Lenovo, Micromax and Spice is already assembling handsets in India. Other firms like HTC, Asus and Gionee have revealed their interest in setting up a manufacturing plant in the country. Whereas in Pakistan, Haier will be the first tech company to set up its manufacturing plant.

Indian government has been working on the increasing adoption of technology and telecom by focused government initiatives like “Make in India”.

We have almost 20 million broadband users; IT ministry is developing a comprehensive strategy for internet governance in the country

One of the recent examples of such programs is the government’s “Digital India Campaign”, which envisages a USD 20 Billion investment covering mobile connectivity throughout the country, re-engineering of government process via technology and enabling e-delivery of citizen services.

Investors and foreign companies hesitate to invest in Pakistan because of the political instability, flagging law and order situation, high interest rates, energy crises and frequent power and gas outages

Although Pakistani government isn’t sitting idle and if we have a look at the recent developments in Pakistan, majority of them are due to the development in the IT sector. We have almost 20 million broadband users; IT ministry is developing a comprehensive strategy for internet governance in the country.

Major developments have been made in the recent past which are not enough to make Pakistan as a potential market for international businesses. There are many lingering issues that still need to be resolved including cyber-security, cyber laws, internet taxation, privacy, e-public services to improve ICT infrastructure and services. Therefore, when we compare ourselves with the neighbor countries we have to consider number of facts. Why technology companies prefer working in India than Pakistan?

The answer lies in the fact that the country should offer more than its neighbor and if not more, at least equal then. Investors and foreign companies hesitate to invest in Pakistan because of the political instability, flagging law and order situation, high interest rates, energy crises and frequent power and gas outages.

Terrorism is another reason triggering distractions to the major technology companies to invest in the country. The next stumbling block that stops companies to invest in Pakistan is our ‘Mighty Media’, who has been acting like a rein less horse for quite some time. Pakistani media portrays a very chaotic image of the country and it truly lacks united front on important issues. Instead of following journalistic ethics in accordance with the national interests, in search of ‘breaking news’, our media first acts and then think!

Despite setbacks, Pakistan’s Telecommunication Authority and IT ministry has dramatically changed the nature of telecommunications in the country. Growth in the mobile industry was boosted by the allocation of 3G/4G licenses and the subsequent large scale roll-out of these networks.

E-commerce especially online spending has grown extraordinarily in terms of size and revenue in Pakistan. We get 100s of supporting technology driven start-ups every year, 1000s of apps by Pakistani developers are launched on regular basis and most importantly entrepreneurs are taking special interest in providing techno-financial and facilitation support scheme. All these efforts show the definite success and struggle of private sector to provide an ideal and attractive environment for technology companies. But they can only do with in a certain limit, in reality it is the responsibility of the government to provide favorable environment to foreign companies. Like in India, it wasn’t the private sector alone that attracted foreign investor rather it was the government that took it upon itself and accepted the challenge of improving its economy. It was because of initiatives like “100 smart Cities” and “Make in India” that brought the country in the lime light and made it an interesting case for international tech companies.  Today all big nations and companies are eager to be a part of India’s tech revolution whereas Pakistan is still stuck with years old problems.  Technology will be the stepping stone in each nation’s economic and social development, it is high time Pakistan realizes this importance and starts taking some serious steps.

in India, it wasn’t the private sector alone that attracted foreign investor rather it was the government that took it upon itself and accepted the challenge of improving its economy