October 25, 2006

Probably no single factor influenced the development of Bangalore as a center of industry more than the city's long-standing educational culture, fostered by the intertwining influences of Bangalore's colonial administrative establishment and it's pleasant weather. The city's educational establishment comprises institutions such as the Indian Institute of Science-one of the oldest in the country, having been founded in 1911-and several others dating to recent decades, including the Indian Institute of Management, the Institute for Social and Economic Change, the Indian Statistical Institute, the National Law School of India University and Electronics City's own International Institute of Information Technology, Bangalore (formerly Indian Institute of Information Technology).

Bangalore became an industrial center after India gained independence in 1947, with the founding of aerospace and defense companies under government auspices. However, the information technology only got started after the national government began to move away from socialist economic policy tendencies.

The establishment of so-called Export Processing Zones (EPZs) allowed for duty free import of equipment provided it was to be used to support industries with products for export only, according to V. Shankar, executive vice president and head of iflex solutions' PrimeSourcing division, whom I met in Bangalore. "It was one of the few things that the government has done right," he comments. The zones originally applied to specified geographical areas but can now apply to individual facilities. The government later also granted multi-year "tax holidays" to allow companies to gain some financial momentum.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...