Information Technology (IT) industry in India is one of the
fastest growing industries. Origin The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers for installing system software for a U.S. client. Problems before 1984: • Local markets were absent and government policy toward private enterprise was hostile. • During that time Indian economy was state-controlled and the state remained hostile to the software industry through the 1970s. • Import tariffs were high (135% on hardware and 100% on software) and software was not considered an "industry", so that exporters were ineligible for bank finance.

Government policy towards IT sector changed when Rajiv Gandhi became Prime Minister in 1984.......... • His New Computer Policy (NCP-1984) consisted of a package of reduced import tariffs on hardware and software (reduced to 60%), recognition of software exports as a "delicensed industry", i.e., henceforth eligible for bank finance and freed from license-permit raj, permission for foreign firms to set up wholly-owned, export-dedicated units and a project to set up a chain of software parks that would offer infrastructure at below-market costs. These policies laid the foundation for the development of a world-class IT industry in India.

The Indian Information Technology sector can be classified into the following broad categories IT Services Engineering Services ITES-BPO Services E Business .

• Industrialization and Prototyping. • Packaged software support and installation. . • Systems integration. processing services. • Hardware support and installation and • IT training and education. • Mechanical Design.IT Services can further be categorized into : • Information Services (IS) outsourcing. •Electronic System Design (including Chip/Board and Embedded Software Design). Engineering Services include : • Industrial Design. • Design Validation Testing.

• Data Processing. • Back Office Operations.IT Enabled Services are services that use telecom networks or the Internet. • Remote Maintenance. E Business (electronic business) is carrying out business on the Internet. Call Centres. For example. etc. it includes buying and selling. • Business Process Outsourcing. . serving customers and collaborating with business partners.

. etc. •· Quality telecommunications infrastructure.Strengths of the Indian IT sector: •· Highly skilled human resource. •· Following Quality Standards such as ISO 9000. . Oracle. •· Many global players have set-up operations in India like Microsoft. •· Cost competitiveness. •· Low wage structure. •· Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of e-governance projects). •· Quality of work.. Adobe. •· English-speaking professionals. SEI CMM etc.

•· IT development concentrated in a few cities only. . •· Dearth of suitable candidates.Weaknesses of the sector: •· Absence of practical knowledge. •· Contribution of IT sector to India’s GDP is still rather small. •· Less Research and Development.

• In 2010-11.5 million people are employed in the sector either directly or indirectly. Mumbai. Coimbatore. Ahmedabad.Market Trends • The Indian IT industry accounts for a 5. • It provides employment to a significant number of its tertiary sector workforce.19% of the country's GDP and export earnings. • It is expected to touch at US$225 billion by 2020. NCR. • The other emerging destinations are Chennai.33 billion compared to China with $35. annual revenues from IT-BPO sector is estimated to have grown over $54.85 billion. Trivandrum. .76 billion and Philippines with $8. Kolkata. • 2. Pune. • The most prominent IT hub are Bangalore and Hyderabad.

93547.9 mil $ .IT sector is attracting considerable interest not only as a vast market but also as potential production base by international companies.

And the strong production base has boosted the exports of computer hardware as well as software: 58810.5 mil $ .

Several world leaders including General Electric. British Airways. and Citibank. American Express. Companies operating from India are able to leverage the advantage of the Indian time zone to offer 24 x 7 services to their global customers. have outsourced call centre operations to India. .The rapid growth in the sector is a consequence of access to trained English speaking professionals. cost competitiveness and quality telecommunications infrastructure.

Therefore India is considered as a pioneer in software development and a favourite destination for IT-enabled services. 53656.4 mil $ .


7 105465.3 93063.9 56648.2 .5 63735.Increasing Potential of Indian IT Sector 36415.2 41729.

1860. It is a not-for-profit organization.. internet. National Association of Software and Services Company (NASSCOM): NASSCOM acts as an advisor. implementation and review of national policies in the field of Information Technology including hardware and software. registered under the Indian Societies Act. and has played a key role in enabling the government in India to develop industry friendly policies. e-commerce and information technology education and development of electronics. . consultant and coordinating body for the IT-BPO industry in India. standardization of procedures. NASSCOM was set up in 1988 to facilitate business and trade in software and services and to encourage advancement of research in software technology.Regulatory Regime and Laws relating to the IT sector: 1. 2. Department of Information Technology (DIT): This department which is under the Ministry of Communications and Information Technology is responsible for the formulation.

3. The Indian Information Technology Act addresses the following issues: · Legal Recognition of Electronic Documents. . · Offenses and Contraventions. · Legal Recognition of Digital Signatures. Information Technology Act. 2000. 2000: The legal enactment which governs the process and dissemination of information digitally in India is the Information Technology Act. · Justice Dispensation System for Cyber crimes.

. in general.Government Initiatives 1. •Special Economic Zones (SEZs) are being set up to enable hassle free manufacturing and trading for export purposes. with the exception of some defense related items. all Electronics and IT products are freely importable. Provisions undertaken Under Foreign Trade Policy • In general. high end super computer and data processing security equipment. with the exception of a small negative list which includes items such as high power microwave tubes. •Second hand capital goods are freely importable. are freely exportable. •Zero duty Export Promotion Capital Goods scheme (EPCG) which allows import of capital goods at zero% customs duty is available to exporters of electronic products. •All Electronics and IT products.

• However. scanner. monitor. subject to the condition that the goods shall not be used for any commercial purpose and are non-transferable: •Schools run by Central or State Government or a local body •Educational Institution running on non-commercial basis by any organization •Registered Charitable Hospital •Public Library •Public funded Research and Development Establishment •Community Information Centre run by the Central or State Government or local bodies •Adult Education Centre run by Central or State Government or a local body •Organization of the Central or State Government or a Union Territory .• The import of second hand computers including personal computers/ laptops and refurbished/reconditioned spares are restricted for import. laptops and computer peripherals including printer. keyboard and storage units can be imported freely as donations by the following category of donees. second hand computers. plotter.

5. the department has put in place the 2 key schemes. Industry Promotion Activities • Infrastructure Support Inadequate infrastructure has been identified as one of the constraining factors being faced by the Electronics Hardware manufacturing sector. • R&D Promotion Major highlights include promoting Startups focussed on technology and innovation. In order to address the same. . Support International Patent Protection in Electronics & IT (SIP-EIT). Multiplier Grants Scheme (MGS).2.2008. the Department has notified the Policy Resolution for setting up of Information Technology Investment Regions (ITIRs)* in the Gazette of India dated 28. a weighted deduction of 150% of expenditure incurred on in-house R&D is also available under the Income Tax Ac. In addition to the existing scheme for funding R&D projects.

Tax Incentives Over the years. Second hand capital goods. the Government has been taking steps to bring down the total taxation level on electronics Hardware. VAT on IT products is @4%. to be fulfilled in 8 years reckoned from Authorization issuedate. The general rate of excise duty (CENVAT) has been reduced to 8% and Central Sales Tax (CST) has been reduced from 3% to 2%. The capital goods shall include spares (including refurbished/reconditioned spares). subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme. tools. may also be imported under the EPCG Scheme. jigs. Export Promotion Capital Goods (EPCG) Scheme The concessional 3% duty EPCG Scheme allows import of capital goods for preproduction. fixtures. dies and moulds. . without any restriction on age. production and post-production at 3% customs duty.

2006”. Duty Remission Schemes consist of : •Duty Entitlement Passbook (DEPB) Scheme •Duty Drawback (DBK) Scheme Special Economic Zones (SEZ) Scheme As per the “Special Economic Zones Rules. including information technology enabled services. in case a SEZ is proposed to be set up exclusively for electronics hardware and software.Duty Exemption and Remission Schemes Duty exemption schemes enable duty free import of inputs required for export production. . notified by the Department of Commerce. Duty exemption schemes consist of: • Advance Authorisation scheme •Duty Free Import Authorisation (DFIA) scheme A Duty Remission Scheme enables post export replenishment / remission of duty on inputs used in export product. the area shall be ten hectares or more with a minimum built up processing area of one lakh square meters.



Today the exports made by STPI registered unit during 2008-09 are INR 215571 Crores about 90% of total software exports from the Country. • Equipment can also be imported on loan basis/lease. • Central Excise Duty Exemption in full on indigenous procurement. • Use of computer imported for training permissible subject to certain conditions. .3. training and value added services. • Computers can be donated after two years of use to recognized non-commercial Educational Institutions/Hospitals without payment of duty. data communications servers. • Depreciation on computers at accelerated rates up to 100% over 5 years is permissible. • Sales in the DTA up to 50% of the FOB value of exports permissible. Software Technology Parks (STPs) The services rendered by STPI for the Software exporting community have been statutory services. Benefits under STP Scheme • Customs Duty Exemption in full on imports. • All relevant equipment / goods including second hand equipment can be imported (except prohibited items). incubation facilities.

TL 9000 includes standardized product measurements that can be benchmarked. • ISO/IEC 90003:2004 provides guidelines for the application of ISO 9001:2000 to computer software . QuEST Forum.0. an interpretation developed by the telecom consortium. In 1998 QuEST Forum developed the TL 9000 Quality Management System to meet the supply chain quality requirements of the worldwide telecommunications industry. The current version is 5. unlike ISO 9001 or other sector standards.Quality Standards • TL 9000 is the Telecom Quality Management and Measurement System Standard.

an independent organization founded by the Software Engineering Institute (SEI) and the Object Management Group (OMG) . the software structural quality characteristics have been clearly defined by the Consortium for IT Software Quality (CISQ). and is separate and distinct from the "Quality Management" of processes. measurement and evaluation.Quality Standards • ISO/IEC 25000n — Quality Management Division addresses software product quality requirements specification. which is defined in the ISO 9000 family of standards • Based on these models.

These biases include changing priorities after the start of a project or not having any clear definitions of "success“ The standard is divided into four parts: • quality model • external metrics • internal metrics • quality in use metrics. • FDI IN IT SECTOR INCREASED BY A RECORD 700% IN THREE YEARS: KAMAL NATH .Quality Standards • ISO/IEC 9126 Software engineering — Product quality is an international standard for the evaluation of software quality. The fundamental objective of this standard is to address some of the well known human biases that can adversely affect the delivery and perception of a software development project.

UKbased security apparatus manufacturer. . 3. for offering engineering facilities. Global giant Walmart has short listed there Indian IT dealers namely Cognizant Technology Solutions. the pact is estimated to be in the range of US$ 200US$ 250 million. A 5 year agreement between HCL Technologies and News Corp for administering its information centers and IT services in UK. As per the industry analysts. 2. the industry is all set to witness some multi-million dollar agreements namely: 1.NEWS Article Relating To Information Technology • In the next few years. UST Global and Infosys Technologies for a contract worth US$ 600 million. US$ 50 million agreement between HCL Technologies and Meggitt.

“Enclave” type development of software with exclusive focus on export cannot bring about desired benefits if such a strategy ignores the linkages between export and the domestic market.Conclusion There is a legacy vision derived from export-success of India’s software that has given rise to optimism regarding India’s growing pre-eminence in global IT canvas. Deeper analysis shows that there is need for a comprehensive IT development strategy to ensure India’s durable presence in the global software market. . Vision 2020. Such a vision builds on a much larger vision of all round development of IT that pervades wide crosssection of Indian economy and society. is a much larger vision. therefore.

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