The Electronics Corporation of Tamil Nadu (ELCOT) has snubbed Microsoft commercial products in favour of open source ones.

The government-owned organisation delivers IT services to the southern India state of Tamil Nadu, has decided to shift its 99% commitment to Microsoft so its projects will be deployed on open-source software, including Linux in future.

ELCOT decided in favour of open-source software because of its lower cost than proprietary software from Microsoft and other vendors, C. Umashankar, managing director of ELCOT, said Wednesday. Open-source software also provides better ease of operation and higher security, he added.

The company will migrate from Microsoft at the server and desktop levels, according to Umashankar . "My job is to save cost, and open-source software delivers the same if not more efficiency at a marginal cost," he added.

ELCOT negotiated with Microsoft to lower the price of Windows XP Home Edition to 500 Indian rupees (US$11), but the company was not willing to cut prices on the software, Umashankar said.

Tamil Nadu is a key state in India, and the decision by ELCOT to move entirely to open source could lead to the state government adopting Linux, according to analysts. Over 6,500 Linux systems are already being shipped, while another 6,100 Acer desktop systems with Novell’s Suse Linux distribution are on order.

In total, 20,000 Linux-based desktops systems are scheduled to go live in the region’s schools, all servers will run on Red Hat and ELCOT expects to train some 30,000 government workers on the new equipment.

ELCOT has already implemented a number of applications for the government running on Linux, and the government is awakening to cost and security benefits associated with open source, Umashankar said.

Not that Microsoft didn’t try and change ELCOT’s decision. But Umashankar said the company offered him a price of $1,555 (£799) per seat, but was looking more for a drastic reduction to $225 (£115) before being financially viable. He pointed out that for as little as $135 (£69) per seat open source alternatives offered an operating system, productivity software and a wide range of utility, database and development tools.

ELCOT also acts as a procurement agency for computers and software for the Tamil Nadu government.

Another south Indian state, Kerala, announced last year that it had decided to promote free and open-source software in education, but would not make it compulsory. The government would like to avoid a monopoly by Microsoft and would like to provide equal opportunity for Linux and Microsoft's Windows operating system in schools, said M.A. Baby, a minister in Kerala's Communist government, in August.

India's federal government has, however, declined to take a stand in favour of either proprietary software or free or open-source software. Some Indian federal and state agencies have been beneficiaries of Microsoft's programs to promote the use of IT in schools.

[Additional reporting by Miya Knights, CIO UK]