The licensing system engendered by the Minicomputer Policy was the major policy shift [...] the DoE was essentially offering licenses to any Indian firm applying to enter the computer hardware industry. [...]

This impacted directly, rapidly and negatively on the competitive structure of the Indian hardware industry. The outcome was a heavily fragmented industry comprising numerous small computer firms. Lumbered with limited market share, excessive price competition and uneconomic scale, most firms were unable to generate the profits required for reinvestment in upgrading and expansion. [...] Reinvesting profits with a longer-term view of breaking into export markets made little sense in the absence of government commitment towards developing the industry.