|I. STRATEGIC POLICY FOR IT
Productivity of the Indian Software Industry will be
continuously upgraded by de-licensing and de-regulating the import of software
productivity tools. The per capita productivity level of Israel for Software Development
shall be kept as a target for surpassing by the year 2003.
For keeping pace with the fast changing trends in the
software technology, companies and Software development organizations will be
progressively encouraged to spend atleast one-fourth of their total software Budget for
the purchase of software productivity and quality tools and nascent software related to
the latest software technology trends.
The high quality of Indian Software Services and
Software products exported, will be sustained by compulsory insistence of ISO-9000/SEI
level-5 Standards or equivalent, certified by one or more competent certification agencies
In their drive to increase the international
credibility, the software companies shall be allowed to utilise a part of their export
earnings for putting in place all necessary means for meeting strict delivery schedules
and customer satisfaction.
With software export growth poised to reach annual
doubling rates by the year 2001, Government will fund a number of study projects to
understand the problems precipitated and solutions required under conditions of such high
growth rate. The findings will be publicised through appropriate media to all the
companies and organizations directly or indirectly serving the export market. The
Government will endeavour through crash programme efforts to help the industry overcome
major bottleneck situations arising therefrom. In particular, the fast growth rate is
making a large number of project managers to become entrepreneurs, thus creating a gap in
demand and supply of project management skills. Special funds will be enabled for
commensurately increasing the supply of project management skills.
With India having the largest pool of English
speaking IT manpower in the world, the Government of India will encourage furtherance of
this strategic advantage for increasing software export. At the same time, special
incentives will be given for increasing the language advantage in exports by promoting
sections of IT manpower to cultivate other languages like European languages, Russian,
Japanese and Chinese. For internal spread of IT culture, the knowledge and experience
gained in language computerisation will be adequately extended to all the Indian languages
by the year 2003.
One of the factors attributed to the software success
of India is the mathematical and logic expertise in the background of more than 2000 years
of mathematical culture. The Government will encourage migration of mathematical talents
into mathematically oriented software development through adequate number of scholarships
as well as promotional retraining programmes.
To create confidence among the recipient
organizations in developed countries for Indian software export, the existing Copyright
Law, which is one of the toughest in the world, will be implemented in practice by
suitably enforcing the existing Laws.
As the trend of setting up of global research and
development units by national and multinational companies is a major opportunity for
India, which has one of the largest scientific and technical manpower talent pools, the
Government will extend the facilities and supportive policies given to local R&D to
such global R&D units also.
Offshore software development in India, through high
speed satellite and fibre optic links, shall be maximally de-regulated for enabling the
creation of such linkages dedicated to software and related services export from India.
With about 160 out of Fortune 500 companies having
out-sourced their software to companies in India by 1998, Ministry of Commerce will work
out a crash programme for awareness building for increasing this number to 300 by the year
2001 and 400 by 2003.
Ministry of External Affairs will create a Cell
operating through specialised franchisees, for creating the best possible ambience for
Indian software exporters to do business outside India. This would include resolutions
conducive to Indian enterprises and Indian enterprises trading overseas to combat
protective and non-tariff barriers created in the developed world, including Visa control.
The country will launch major proactive technical and diplomatic actions at ITA-2 of WTO.
All large IT projects taken by Indian companies in
overseas market requiring more than 300 man-years of effort, will be eligible for all
concessions under project exports.
To enable tapping the vast global market in products
and packages, which is the next step of the value chain, the following policies will apply
to leverage our software development/management skills in the international market, to
encourage trend-setting Indian companies and to pave the way for the new entrant's
confidence in the Product Software business:
A definite time lead will be
given for the Indian product software, where global standard products are
existing/emerging which will be for a period of 24 months, termed as Indian software
products promotion period.
infrastructure industries like Petroleum, Power, Steel, Banking, Insurance, Hospitals and
Mining to work with the various Indian product software companies and to create global
Banks will extend working
capital limits for Product Software companies and will be in multiples of net owned funds
similar to the provisions applicable to NBFC and other such service companies at present.
It is very important to
build brands internationally. The Government will provide soft loans/subsidies for Brand
Building of product software developed in India through the India Brand Equity Fund of the
Ministry of Commerce.
The provisions of Section
35(2AB) of Income Tax Act will be applicable to Product Development also.
With India making an entry in 1999 into the listings
in major overseas Stock Exchanges, a stage is set for attracting requisite Foreign Direct
Investments. Taking note of the advantages of such overseas listing, the Government of
India will maximally simplify the procedures to enable any registered Software Company to
get itself listed in overseas Stock Exchanges like NASDAQ, NYSE, etc. After the listing,
the companies can avail without restriction, post-listing services like Internet-based
Information services, daily summary of activity in the Stock Market, quality, analytics,
foreign market data, etc., as well as make it easier to participate in analyst meetings,
regional conferences, satellite broadcasts, Internet hot links, Board meetings, etc. In
the country's drive to create Indian multinationals around the world, listing in overseas
stock exchanges will be an essential facility.
A major industry reorientation programme will be
initiated through CII and NASSCOM with promotional Government funding to attain world
leadership position in the following areas among others: Y2K solutions, Euro Solutions,
IT-enabled Services, Net-based products, Web Technologies, Electronic governance,
Electronic Commerce and Management of Convergence.
STPI and private STPs can host IT-enabled Service
export ventures for which all facilities, concessions, procedures and policies applicable
to Software Export will be equally applicable.
A Government and industry funded consortium will be
established that would scout for suitable business opportunities globally, and subcontract
such projects to 'Grameen Data Processing Centres' that would be run and managed as profit
centres by various local enterprises, thereby creating quality employment at grass root
Create a venture capital fund with an initial funding
of about US$ 100 million towards funding start-ups and entrepreneurial efforts for
catering to IT Enabled Services Market.
A Consortium of IT companies will be encouraged to
establish 'Indian Institute of Global Services' specializing in Global Services for
providing market intelligence on domestic and global services industry to disseminate
information such as new trends, market conditions, key indicators, new opportunity areas,
etc. The Institute will conduct research and suggest best practices, positioning of India
as a global hub for IT Enabled Services, helping start-ups with marketing plans and
contact databases, etc. , design and facilitate courses for graduating and developing
professionals for this sector.
Courses on IT Enabled Services will be introduced as
a vocational course under various schemes of Government of India.
An industry consortium will be formed by active
collaboration of Government of India, NRIs, leading Indian industrial houses, software
companies and venture capitalists to address the huge opportunity offered by IT Enabled
Services. Resource infusion from each of the stake holders, besides financial resources,
may include mentoring for initial take off stage, establishing a global network to
evangelise India advantage and enlist corporations/clients; co-development of quality
infrastructure in India; regular advice to authorities on issues to be addressed;
strategic and operational assistance; initial managerial deployment, etc. This consortium
may also do a continuing job of building India's global brand equity in this area.
Government will enable a paradigm shift to 'Hub to
globally competitive value services' as against talent provider, as a means for sustaining
India's advantage and protecting future earnings.