Cost overruns, apart from disagreement on conditions of the contract led to the cancellation of original tender issued by the government last year for the $35 laptop project, officials told ET.
“Disagreement on the financial cost with the vendor led to the tender cancellation,” said a government official involved in the project. He requested anonymity.
This is not the first time that a low-cost computing project in India has hit snag. Three years ago, India’s then secretary for higher education RP Agarwal had announced plans to launch $10 laptop, which later turned out to be a storage device with 2 Gigabyte of storage capacity. With only 3-4% of nearly 1.2 billion currently exposed to some kind of computing device or Internet experience, India has been scrambling to find a way to increase the penetration of computers.
Announced by the minister for human resource development Kapil Sibal in July last year, the $35 laptop was designed together by engineers at India’s premier institutes—IIT and the Indian Institute of Science . At that time, Mr Sibal had said his department would work to bring the cost further down to $10 over next few years.
“The laptop components alone were costing the vendor Rs 5700 without taking into account the import duties and logistics. We were however planning to sell it at Rs 1500 per piece,” the government official added.
According to an internal note circulated among officials at the ministry of HRD, a copy of which was shown to ET on Monday, the short listed vendors “started listing some additional, unacceptable, conditions,” the note added. Failure to furnish a bank guarantee of Rs 60 crore which is required under the government’s General Financial Rules , 2005 was among reasons cited in the note. A bank guarantee indemnifies the government in case a vendor fails to deliver the project. As a result, the ministry cancelled the previous order and has re-advertised, another government official said.
Scheduled to launch this January, the device is based on Linux operating system, which comes almost free, and has Internet browser, multi media player among other basic features.
HCL Infosystems, which competes with multinational computer hardware makers in the Indian market, was among vendors chosen by the government for this project. On its part, HCL said it was unaware of any such decision by the government.
“We congratulate the Government for their vision on the $35 Tablet. We have no information of a decision being taken. When government was seeking collaboration, we were one of the first to partner it,” the company said in a statement.
A Ministry of HRD spokesman blamed HCL for setting the January 2011 deadline, and maintained that the laptop would be launched during mid this year.
“It was HCL who had claimed the launch to be around January, 2011,” the spokesperson said. “Yes, we have re-issued a new tender. The matter will be sorted out in a few weeks,” the official said.
The government had also allocated $6.5 million for the ambitious project. The initial order was for a 100,000 tablets, to be based on Google’s Android operating system.
While announcing plans for the $35 laptop, the government officials had described it as India’s answer to the MIT’s famous ‘one laptop per child’ initiative aimed at producing the $100 laptop. MIT’s $100 laptop program started five years ago ended up becoming $200 in cost.
Now, the government plans to seek help from IIT alumni in sourcing components from new suppliers from Taiwan and Korea.
Technology analysts tracking the sector said it would be almost impossible for the government to launch the $35 laptop without offering any subsidies to component suppliers and other vendors.
“The microprocessor and screen would alone cost over $35 in the market,” said Vishal Bhatnagar, IT analyst with Gartner Inc.
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