India's technology companies need to come out of their preoccupation with short-term profit margins as it may lead to a long-term meltdown, said R Chidambaram, principle scientific advisor to the Government of India.

"The industry needs to move up the value chain, which requires long term investment and wider participation. The companies should not worry about the short term profit margins," Chidambaram said at the annual session of the Manufacturers Association of Information Technology.

Chidambaram added: "If India has to emerge globally competitive in India, we will have to design, develop and produce our own hardware. Strategic sectors such as defense can ill afford to risk the national security by relying on imports. The Indian IT industry now must enter the hardware arena. It is time that Indian industry looked at the existence of local capabilities and capacities to significantly contribute to the hardware sector through value addition route."

He also called for the close working relationship between academic institutes and industry to develop market driven research and products.

Chidambaram said Indian companies need to seek international participation on an equal partnership basis.

"We should participate in mega science projects, high energy physics, genomics or information technology," he said.

"The government and the industry need to 'position' India as a nation of Technological Excellence or else the perception will forever remain that we are only providers of 'inexpensive services'. This transition is essential for transformation from a third world nation to a developed one," remarked S Devarajan, the outgoing president, Mait.

The 20th Mait annual session appointed K R Naik, chairman and managing director, D-Link India as the president. Venkat Kedlaya took over as the vice president.