Bangalore: The "China factor" is looming large over the Indian IT industry, which needs to move up the value chain on an urgent basis and get into new areas to face competition from the neighbouring country, a top government official said on October 30.

"The China factor is looming large. Please do not underestimate China. There is an urgent need for Indian IT industry to move up the value chain," secretary in the Ministry of Communication and Information Technology, R R Shah, said in Bangalore.

He said China's hardware strength is six times that of India and the neighbouring country is scaling up its software strengths rapidly. China is now focusing on the English language.

Giving examples, Shah, who visited the neighbouring country earlier in 2002, said China goes about in a "ruthless" manner in whatever programmes it took up.

He said there is an urgent need for the IT industry to make strong inroads into areas such as VLSI (very large system integration) design, embedded software, micro- electronic mechanical systems and nano-electronic mechanical systems, bio- informatics and bio-computing, among others.

Shah, who was addressing a conference organised as part of the ongoing Bangalore IT.com 2002, said the F C Kohli Committee has submitted its report and has recommended that India should produce 3000 VLSI designs every year. "We are working on functionalising it," he added.

On some companies apprehensive on intellectual property rights (IPR) issues in China, he suggested that they could consider setting up a nominal regional headquarters in Hong Kong, whose laws are akin to that of India's, and deploy field officers in China.

PTI