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Tamil Nadu’s laptop distribution scheme hit by delays by Surabhi Agarwal & Vidya Padmanabhan

Tamil Nadu’s free laptop distribution scheme, involving what is said to be the largest government order for computing equipment in India, hangs in the balance as all but one vendor, hit by the hard disk shortage created by recent floods in Thailand, have refused to sign on to the state administration’s delivery schedule.

“Out of six vendors only one has signed an agreement and we have given a purchase order,” an official with the Electronics Corporation of Tamil Nadu Ltd (Elcot), the public sector company charged with the procurement of the laptops, said on condition of anonymity. “All the others are yet to come.”

The exception is Lenovo India Pvt. Ltd, which has agreed to begin delivery of its assigned order of 300,000 laptops by March, the official said. Even that company has asked for time until July to deliver the laptops, but the government has not yet acceded to the request, the official added.

The other vendors—HCL Infosystems Ltd and Acer India Pvt. Ltd with orders of 200,000 laptops each, Hewlett-Packard India Pvt. Ltd with 65,000, RP Infosystems Pvt. Ltd with 75,000, and Wipro Ltd with 50,000 laptops—had all refused to sign agreements with the government.

They claimed they could not adhere to the government’s deadline because of a shortage of critical components from flood-affected Thailand, the official said.

Elcot has passed on the issue to the government, which will likely be making a decision on it in the next two weeks, according to the official.

The J. Jayalalithaa administration had set out to distribute 912,000 laptops this fiscal as part of its plan to give away 6.8 million laptops over its five-year term to students of government-aided higher secondary schools and colleges to fulfil a pre-election pledge.

Of the laptops scheduled to be distributed this fiscal, a token 6,600 were distributed in September to mark the launch of the government’s giveaway schemes. Orders for the remainder were distributed among the six vendors last month at a price of Rs.13,939 per machine, which was the lowest bid, submitted by Lenovo. At that price, the previously allocated budget of Rs.912 crore will now go up to more than Rs.1,200 crore, the Elcot official quoted above said.

In a meeting in the third week of November, all the vendors met state government representatives, and, invoking the force majeure clause—which exempts vendors from responsibility for delays due to “acts of God”, or events over which a company has no control—had submitted letters asking the government for more time for the delivery of the laptops, said P.V. Vaidyanathan, head of operations at RP Infosystems.

RP has asked for a 45-day extension, Vaidyanathan said, expressing confidence that the company could execute its order by the end of April rather than March.

R. K. Amar Babu, managing director of Lenovo India, said there were a lot of variables in the transaction including software, service centres and delivery locations, and he would not like to comment on the timeline for the delivery of the order.

“The hard disk crisis putting pressure on the supply chain is a well known fact,” he said. “We are keeping the Elcot team updated and discussions are ongoing about the timeline.”

He added that according to industry updates, the flood situation in Thailand is expected to get better only by May.

S. Rajendran, chief marketing officer of Acer India, also said it would be difficult to comment on the timeline or the price points.

“There is no other alternative with us right now,” he said. “But we the vendors are not backing away from the order. We are in discussions with the government so that they understand the constraint caused by a natural calamity.”

In an email, a Wipro spokesperson said that the relevant executive was unavailable for comment.

An HCL spokesperson declined comment by email, saying, the company, as a policy, does not “comment on market speculation or any individual customer business”.

Of the many information technology (IT) component manufacturers based in Thailand, hard disk makers bore the brunt of the flooding because their manufacturing plants are located in the flooded area. The Manufacturers’ Association for Information Technology (Mait), the lobby group representing hardware companies in India, has in an earlier statement urged the government and consumers to be patient in the face of supply delays caused by the hardware shortage.

“We are appealing to the government and consumers to allow longer delivery period to combat the sudden shrinkage in the supply situation,” Alok Bharadwaj, president of Mait, had said.

“Suppliers are making all efforts to divert stocks to India to cater to a few large orders, but it takes time. They should be spared of penalties or strictures on delays caused by the devastation as this is an act of God,” he said.