Bill Gates Urges India Toward High-End Research and Development

Bill Gates suggested during a visit to New Delhi that India needs to change its focus from low-end manufacturing to high-end research and development, the better to sustain the IT end of its economy and compete with China. Gates will also reportedly discuss a possible partnership between Microsoft and the Unique Identification Authority of India to issue standardized ID cards to India's billion-plus citizens.

Bill Gates advised India to expand its IT horizons and concentrate more on high-end research and development, as opposed to its current focus on technology manufacturing.

"At first some of that [IT boom] was built on low-cost labor," Gates said during his visit to New Delhi, according to Reuters. "It's not a sustainable thing because others can come along with that as well."

While companies such as IBM have been keen on importing their low-cost labor to India, especially as a global recession compels them to cut higher-paid workers in Western facilities, they have been less inclined to pump money into India's high-end research and development. A lack of government tax incentives and funding also contributes to India's research lag; the country's archrival, China, currently has more than 300 more centers devoted to R&D.

"You've got to get the government, universities ... and companies like Microsoft to deepen their commitment to R&D," Gates is quoted as saying.

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While in India, Gates also suggested that Microsoft could partner with the Unique Identification Authority of India, a government entity, to issue a standardized identification card to the nation's billion-plus citizens. Indians will start receiving their individual identity numbers, which will be linked to the cards, within 12 to 18 months.

"I'll certainly commit Microsoft wants to be a partner," Gates said, according to a Bloomberg report. "I am fascinated to hear how that is shaping up."

The report also suggested that Gates will be meeting with Nandan Nikekani, former co-chairman of Infosys Technologies and the person newly in charge of the Unique Identification Authority of India, on the night of July 24 to talk about the details of the project.

Microsoft itself might welcome the new business. Wrestling with the recession, the company posted a substantial hit to its quarterly earnings on July 23, reporting a 17 percent decline in year-over-year revenue. Earnings undershot Wall Street projections by more than $1 billion.

Despite stringent and companywide cost-cutting measures, Microsoft CEO Steve Ballmer suggested during a July 14 speech at the Microsoft Worldwide Partner Conference in New Orleans that the company has no intention of lowering its own R&D spending.

"We're investing and keeping our R&D spending flat at $9.5 billion," Ballmer told the audience. "That is a testament to our belief and optimism about the future. We're going to keep the same old Microsoft approach: tenacious, long-term."