Bangalore, already the heart of India's software industry, is now developing plans to attract computer hardware manufacturers.

Karnataka's state minister for Information Technology BK Chandrasheker has outlined plans to develop the state's nascent hardware industry.

"We have now decided to set up a hardware technology park in Bangalore as a special economic zone so that there are no bureaucratic hassles.

"There are all kinds of concessions given by the national government of Delhi and by the state government in Karnataka," he told the BBC's World Business Report.

His hope is that this move to boost hardware production will create jobs, foster domestic demand for computers and help bridge the digital divide in India.

Cheap computers for all?

Hardware manufacturers could make computers or components in Bangalore or assemble products, he suggested.

"Even if it is assembly initially and not manufacture straight away, it will still provide employment to people here and secondly, this is very important for us, it will be the genesis of creating a bigger, well entrenched domestic market," he added.

The creation of a domestic market for computers will in part hinge upon the provision of cheaper products, he pointed out.

The provision of computer stations and information kiosks in rural areas will also go some way to bridging the digital divide.

Slowdown looming?

His belief is that Bangalore's highly skilled population leaves it better equipped to withstand a recession than other economies.

"If the slowdown was to turn around by the middle of next year, as people seem to be predicting, you have this resevoir of well qualified engineers," he said.

India's large domestic market should also protect it from chill economic winds globally.

"The slowdown in the economy is not as perceptible here as it is elsewhere," he said, admitting, however, that while much of India's industry was self sufficient, software exports hinged on the US.