Justin states that I underestimate “the scope and importance of proactive government support to create the conditions for their success. The booming of India’s IT industry was in part due, among other things, to strong government support, including large investments to improve land-based telecommunications.” The facts are that the government’s support for India’s IT industry was neither proactive (in the sense of taking the initiative) nor strong (in the sense of dollars and cents). Proactive? To the contrary, in the area of information technology, the Indian government’s strategic industrial policy choice was a failure because it backed the wrong horse. In the early 1980s, in its effort to move Indian industry up the value added chain, the Indian government focused its efforts on IT hardware, thinking this is where India’s comparative advantage would be. Attempts were made to develop the hardware sector behind high tariff walls. To quote AnnaLee Saxenian (2002), “Personal computers, components and other IT products manufactured in India in the 1980s were both costly and technically backward, which limited demand and hence the volume production.” Recall that India’s booming IT industry today is based heavily on software and software enabled services. The software industry had its beginnings in the late 1980s (through private companies like Datamatics, Patni, TCS), with no help or backing from the government but was hamstrung by the government’s focus on developing the hardware sector. By the mid 1990s, it was clear that something big was going on in software, and that the scope for growth was significant. The Indian private sector organized itself into a powerful lobby NASSCOM which ultimately prevailed on the government to lower tariffs on hardware so that prices would come down. This move has two effects—the local hardware industry, the government-backed horse, died, and the door opened to the spread of low cost imported hardware, which in turn sparked the IT revolution. Strong? Justin cites the government’s strong support to improve land based telecommunications? I outline the story below and the bottom line is that the government’s support came in the form of a very small sum of money and a deliberate strategy to get out of the way. An electrical engineer named Sam Pitroda spent several successful years in various companies in the U.S. telecommunication industry. In the early 1980s, he came to the conclusion that telecommunication connectivity was an essential ingredient for India’s development. He presented his ideas on how this could happen to his close friend, Prime Minister Rajiv Gandhi, who invited him to return to India and gave him a tiny amount of seed money (Rs. 360 million or 0.01 percent of GDP in 1984) to modernize the national telephone system. In 1984, the Center for Development of Telematics or CDOT was set up to build Indian technology for digital switching systems with a focus on rural connectivity. The rural exchanges were used to provide landline based public calling facilities to a population that hitherto had absolutely no virtual connectivity whatsoever. Other than the small amount of money provided by the government, what was the government’s contribution to this venture? By Sam Pitroda’s own account “CDOT was essentially a bypass to the legacy system which was full of bureaucracy, vested interests, large unions, confused priorities, and political interference.” He also states that “ Rajiv Gandhi understood and appreciated the bypass system to expedite development”. In other words, whatever success was achieved by CDOT happened because the company was allowed to bypass the government and the bureaucracy. There is no doubt that CDOT improved telecommunication access to rural India from the woefully low levels of the 1970 and early 1980s. But that was absolutely not the essence of India's software exports evolution. The latter required high capacity data lines to allow Indian companies to hook up to the Internet. These only came, in high volume and low cost, when the private telephone companies were let in. CDOT was absolutely not a part of the main trajectory of the Indian telecom story which led up to the high bandwidth lines that supported the software export boom. Based on this, it is unclear that the government was either proactive or strong in the success of India’s IT industry. Instead it was very much a story of the private sector seeing opportunities where the government did not, followed by a stance of policies that reacted to private sector and market pressure.