As a citizen of India, I whole-heartedly welcome this measure. One of the benefits (amongst many) is that native Indian citizens will not be marginalized by hordes of illegal immigrants who have crossed the borders of our country. That might sound callous, and yes, it indeed is, but the harsh reality is that many regions of our country have had their demographics completely changed by vast, un-checked immigration from Bangladesh and Burma. These immigrants zealously bring their religion with them - the one with the conspicuous lack of family planning or birth control and outdated ideas regarding education and treatment of women. (I assume you can guess which one)
For a country like India which is already heavily overpopulated with a severe lack of natural resources, such immigration is just breaking the elephant's back. A national identity card system will go a long way to address this severe problem.
I am aware that Americans strongly believe in individual privacy and are only too eager to shudder and sneer at such measures. Privacy is a valid concern, but the need for privacy is stronger in the West and lesser in the East - one f those strange cultural differences - it simply matters less to us here. And in the hierarchy of needs, the rights of basic citizenship and access to government resources matters more than an individual need for privacy.
Will the system be fool-proof? Of course not. It will be hacked - I expect it will be hacked both socially (corruption) and through technology and will definitely be misused a number of times for fake identities. The risk of misuse, however, is not a sufficient argument against the very real need for introduction of such an identity system in our country.
The slashdotter above has hit it right on the head. SAP is a large conservative company and there are varying views on open-source across the organisation. Many folks in the company love open source and attempt to evangelize it, others (usually oldies) treat it with deep suspicion and are ingrained with the 'lets-build-a-new-wheel-again' attitude.
As far as SAP releasing its own products as open source - this is already true for the R3 platform - though it's technically 'view-only' open source (you aren't allowed to modify and distribute, but you can make changes for yourself if you really wished to).
SAP currently has a hard time decision-making on the technology front. Their primary business products are all built on the ABAP application server/platform but the infrastructure is visibly ageing there. Still, the ABAP VM still has some goodies which are still not available on modern day JVM's - isolation and multi-processing, which is becoming more important in today's parallel world. There have been some productive attempts to support Ruby as a new language on the ABAP VM, etc
The SAP Java platform has had a backlash against it for being poor, buggy and not having the accustomed, almost legendary 7x24x365 reliability of ABAP AS. As a consequence, internally, there has been a movement 'back-to-ABAP' for many products. I don't particularly care for ABAP, one will admit that it is good at what it does, but with the product acquisitions that we have made (business objects, etc), we have inherited different technologies and we need to learn to make all of them work in harmony
Give us a few more years to work things out. Despite being an MNC, SAP in some ways is still a traditional 'germanic' company at heart and things move slowly but surely here. It will some more time for people to realise the benefits of opening up their platform to wider adoption.