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8/14/2019 Ind It Ind
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Indian IT Industry- An Overview
Presentation by S. Lakshminarayanan, Addl. SecretaryMinistry of Communications & Information Technology, Government of India
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Overview ofthe Indian Economy
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Key Characteristics
Economy de-linked from Political changes
Stable pro-reform government at the centre
Sustained growth in the face of Obstacles
Ambitious Long-term growth plans
Recognized as the economic powerhouse of the 21st Century
Knowledge based industries are attracting investments and
driving growth
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Economy: Strong Fundamentals
Sustained GDP growth over the last decade around 6% - despite significant
obstacles
Inflation reached all-time low in 2002 and and currently hovers around at 4.5%
Comfortable foreign exchange reserves position US$ 88 bn (9/03)
A stable Rupee (against major currencies) currently Rs. 46 per US$
Pre-payment of foreign debt significantly improved Indias rating
Post 9/11 Foreign Direct Investment (FDI) grew 52% over the previous year
US$ 6.1 bn (2001-02)
Falling interest rates driving consumer demand
Based on PPP, India is the fourth largest economy (US $ 2.9 trillion)
India An Economic powerhouse of the 21st CenturyIndia An Economic powerhouse of the 21st Century
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Economy: Aiming for Rapid Growth
GDP expected to grow 6.5% in 2003-04 8% p.a on an average over a fiveyear period (2002-2007)
Aggressive infrastructure development goals
Active involvement of Private enterprise to augment Ports, Roads,Airports, Power etc.
Attract FDI in excess of US$ 10 bn annually
Further simplification of legislation, de-licensing, setting up regulatoryauthorities such as Central/State Electricity regulatory Commissions, etc.
Achieve US$ 115 bn potential in Electronics hardware and IT Services by
2008
India high on the Radar of many MNCs
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Electronics & Information Technology
Sunrise Industry and the
Area of Growth for the
Millennium
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Indian Electronics & IT Industry
One of the fastest growing sectors of Indian industry.
A growth of 22% in production and 26% in exports during2002-03, a period marked globally by a fall in ICT revenue.
Achieved a CAGR of 25% in production and 41% in
exports during last 5 years.
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Indian Industry Grew at over 35% CAGR between 1999 and 2003
Key factors behind growthin exports
US IT investment boom
Onsite staff supplementationgrowth fuelled by majortechnology waves
Offshore growth led byanchor MNC customers
New emerging service lines(R&D services, BPO)
Per cent
$ million
10,000
2,7001,250
2,650
FY 99 FY 03
12,700
3,900
CAGR
35%
40%
ExportsDomestic 22%
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Overview
Large growth potential
Burgeoning Consumer base exposed to the latest
Increasing outsourcing trend
Exports and global outsourcing will drive future growth
Leveraging India advantage
Indian technology production companies havedemonstrated capabilities to compete in the global market
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Exports - 2002-03
CAGR
Value Growth (5 years)
IT & Electronics - Rs. 53,100 crore 26% 41%( $11.2 billion )
Hardware - Rs. 5,600 crore -3% 14%( $1.2 billion )
Software & Services - Rs. 47,500 crore 30% 49%
( $10 billion )ITES (part of - Rs. 11,700 crore 65%S/w & services) ( $2.5 billion )
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Strong Performance and Growth Potential
8.15
10.4
2.7 40
60
15
0
20
40
60
80
100
120
inU
S$
billions
1996-97 2002-03 2008E
Electronics Hardware Software - Exports Software - Domestic
US$ 21.25 bn
US$ 5.8 bn
US$ 115 bn (Estimated)
CAGR96-97 to 02-03: 24%02-03 to 08-09: 32%
By 2008, India will build a US$ 40 billion Electronics Hardware Industry
Source: Ministry of IT, MAIT
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Global Outsourcing a Key Driver for Exports
1999-2000 2002-03
10.4
1.2
4
0.6
0
2
4
6
8
10
12
in
US$
billions
Software & Services Electronics Hardware
Electronics Hardware
exports Doubled
in last 3 years
Present wave of global outsourcing likely to benefit India significantly
Source: Ministry of IT, MAIT
O S f S
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Opportunities in Software Sector
(McKinsey Report) Year 2008
Total Market Exports
IT Services Exports $ 28-30 bn $ 28-30 bn
Software Products $ 8-11 bn $ 8-11 bn
IT Enabled Services $ 21-24 bn $ 21-24 bnExports
Domestic Market $ 13-15 bn
Total $ 70-80 bn $ 57-65 bn
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IT Industry by the Year 2008
IT Exports
35% of Indias Total Exports in 2008
from 20.4% during 2002-03
Share of IT Software & Services Industry in GDP
Likely to be 7% of GDP in 2008
from 2.4% of GDP during 2002-03
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The India Advantage
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Why India?
Rapidly Improving Infrastructure
Large Talent Pool Availability
High Quality Educational Infrastructure
Low Operating Costs
R&D Strengths
Established Technology Clusters
Government Incentives
L T l t P l i I di Gi it Si ifi t Ed
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Large Talent Pool in India Gives it a Significant Edge
Education Statistics
10,600 accredited institutions
Over 3 mn graduates & Post Graduates per
annum
675,000 Technical Graduates p.a which
include
375,000 Engineers
~ 50,000 Management Graduates
Large pool of English speaking, computer
savvy graduates
No of people Employed: 2003
IT Enabled
Services
Software Electronics
Hardware
160,000
385,000
500,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
W
orkforceNumber
Significant portion of new graduates are being employed by the Electronics hardware and IT Sector
8Source: Department of Education, Ministry of HRD, E&Y Research
Source: Ministry of IT, Press Reports
E ll t f k l d d h
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Excellent sources for knowledge and human resources
10,000Degree Colleges
66IIMs*11IISc*
22IIITs*
77IITs*
29255284Universities / Deemed
Universities
PrivateGovernmentTotalDescriptions
*
IIT Indian Institute of Technology
IIIT Indian Institute of Information Technology
IISc Indian Institute of Science
IIM Indian Institute of Management
India has successfully developed world-class technical and management institutions over the last 40 years
Source: STPI
Si ifi t t th i R&D
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Significant strengths in R&D
175 of the Fortune 500 companies have R&D
operations in India
A vast network of state-owned national researchlaboratories provides world-class support
IT R&D services currently account for more than 15%
of total IT exports.
TI has secured
225 US patents forwork done in
Embedded Softwareand VLSI
Every Philips
product havingsoftwarein it has a
contributionfrom the
Bangalore campus
HP Labs does
high-level researchon futuristic
Technologiesfor emerging
markets.
Source: Press Reports
Hi t h l t f l ti i ti
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Hi-tech clusters for accelerating innovation
Software Technology Park (STP) centers in 35
cities across the country
Approval for setting up of 21 Special Economic
Zones (SEZs) in various parts of the country
Electronic Hardware Manufacturing Clusters
exist in Bangalore, Goa, Hyderabad, Mumbai,
Noida, Pondicherry
Source: SEZ Website, STPI
Investor Friendly Government Policies
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Investor Friendly Government Policies
FDI regime liberalized most sectors de-licensed
Liberalization of foreign exchange regulations
Rupee convertibility on trade account
Unrestricted repatriation of Capital & Dividend allowed
Foreign exchange earnings can be retained in overseas accounts
Rationalization of Customs duty structures
Indirect tax reform - proposal to introduce VAT
Profits on exports under EHTP/STP scheme exempt from tax till 2010
Introduction of SEZs to boost manufacturing
IPR protection new patent law
Labour reforms
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Thank You