IT Taskforce
Basic Background  Report
9th June 1998


 

V. SOFTWARE & IT SERVICES: DEVELOPMENT & EXPORT

5.1 Body Shopping & Software Package Export

i) With IT services including system analysis constituting 75 percent of our export earning as compared to the 25 percent from software development, the infrastructure as well as the strategies for IT services export has to be streamlined. For example, the so called 'body shopping' has to be made easier by combating Visa regulations of the recipient countries like United States, Japan, UK, France, etc., through a planned diplomatic strategy by the Ministry of External Affairs and the Indian Missions abroad.

ii) Software package export which runs on lines similar to the book trade, is giving only less than 20 percent of author's/developer's royalty while the country is not getting 35 percent which goes to the retailers and about 45 percent which goes to the wholesalers. As creating retain outlets in developed countries is logistically very difficult, some large software exporters should be encouraged to open wholesale outlets in those countries.

5.2 Bench Marking against competitor countries

We must bench mark our country with our emerging competitors as was recommended in the 1992 World Bank study and take specific policy initiatives to make up for our weak points.

5.3 Removing Location Restrictions

Restrictions on the location of software companies in residential areas may be removed proved the staff strength does not exceed say 25 people.

5.4 Y2K & Large Niche Markets

Y2K and Euro offer excellent opportunities for a quantum jump in exports. These must be exploited by identifying what the foreign markets want & meeting their demands.

A 'Strategy Group' has to be set up to identify, explore and plan strategies for Large Niche Markets so that the country can penetrate these markets in a nationally planned manner.

5.5 Promotion of Software & IT Services Export

i) Market intelligence should continuously monitor the market trends in the user requirements, and emerging technologies of all the major and potential markets. These inputs will contribute towards product development, R&D efforts, evolving market strategies, etc.

ii) Create a 'Mega Web site' for promoting marketing and encouraging Indian Software products and packages.

5.6. Promotion of IT enabled Service Export

IT enabling services: Lately, India has been doing good work in providing various IT enabling services like back office operations for airlines/banks, medical encryption, data entry and data conversion services. Even some international call centre companies are looking enthusiastically at India, for its cost and quality advantage. Development and export of such services can not only increase our earning of foreign exchange but also generate large scale employment. We should target for US $ 10 billion of IT enabling services by 2008.

To enable this, the following promotional measures are required for the first five years:

i) Subsidise Trade Fairs Exhibiting India's capability in IT enabled services.

ii) Subsidise delegations and road shows from India to sell IT enabled services.

iii) Subsidise ISO/SEI quality certification for IT enabled services

iv) Insert National Advertisements/TV Spots to propagate India as the preferred choice to render IT enabled service.

v) Exempt profits made by exporters from IT Enabled services from Tax

vi) VSNL, DOT, MTNL to reduce their present tariff structure for high bandwidth telecom used for exporting IT enabled services, both domestic and international, and eliminate surcharge on links, if used for voice.

vii) Embedded software may be dutiable at the rate of the hardware that it is embedded within, e.g., Software embedded in a Cellular Phone should be dutiable at the duty rate applicable to the Phone itself.

viii) Reduce customs duty on hardware related to this market segment, such as high speed scanners, modems, etc.

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5.7 Software Export Market Development Fund

For the development of software products and packages, Marketing Development Fund is needed. More over, for the export growth intensive marketing activity is to be conducted in the form of export promotion drive by organising abroad road shows, seminars, production of quality literature, films, etc., for penetration in the new markets. Production of literature in international languages and its distribution through our Missions abroad can also be an effective mode of export promotion. Interaction by the industry associations for undertaking the Market development activity with the Government Agencies would be necessary. For this purpose a fund allocation of Rs. 20 crores per annum would be required.

5.8 Information Content industry

The information content segment comprises the organisations that produce and develop intellectual property. Information content originates from writers, composers, artists and photographers, assisted by editors, film makers, television producers, animators and a host of allied occupations. This includes the preparation of bibliography, annotations and keywords for articles and papers published in over 20,000 journals published worldwide every year. Video programming, scientific or business databases, images, sound recording, library archives, and other media are all part of the information content industry. In addition to this genuinely creative activity a large part of the information content segment is concerned not so much with the creation as with the compilation of information. The compilers of reference works, databases, statistical series and real time information services that supply constant flows of information about things like share and commodity prices, fall in this category.

In almost all information societies the information content sector is growing faster than the overall economy. The significance of the information content segment can be gauged from its relative share of the information industry in developed countries like the US. According to the World Information Report 1997/98 while the information industry in the US in 1994 accounted for sales to the tune of US $ 566 billion, the information content component accounted for US $ 255 billion (45.05%) followed next by information delivery US $ 160 billion (28.27%) and information processing US $ 151 billion (26.68%).

At present most information content on international networks relates to the developed countries of the West. Network connectivity can therefore have connotations of cultural imperialism unless steps are taken to develop indigenous information content in the country to maintain national culture and identity.

Digitisation of Indian languages and scripts should be encouraged for development of genuinely Indian information content. Computer based translations between Indian languages should also be taken up as a national project to permit easier communications between people from different parts of the country in future.

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5.9 Formation of Global Software Cities

The past few years have witnessed major liberalisation in Government procedures and policies. This has attracted a large number of Indian and foreign companies to set up operations in India. However, growth and development of infrastructure has not kept pace with the growth of the industry. Bangalore has already emerged as the Silicon Valley of India. In a country as vast as India, it is imperative that we should have more cities becoming Silicon Cities like Bangalore. Every Indian State should have its own Silicon City. Hyderabad has just emerged as one such. Therefore, such a move, would require policy motivation as well as creation of silicon infrastructure around the existing and new universities and development of international and domestic airlinks This essentially implies that a software supercorridor should be set up across the country. The Central and State Government need to encourage setting up of hi-tech infrastructure exclusively to house units for software development and IT enabling services. Such modern facilities could be even constructed with the help of joint ventures between the Government and private industry. Over the next 10 years, 50 Silicon Cities should be developed. The hi-tech facilities should be complete with modern telecom and IT connectivity, uninterrupted power supply and world class environment.

We should also try to create and develop a Centre of Excellence in IT around every such high-tech complex in these 50 Silicon Cities. This could be done in the form of IIITs (Indian Institutes of Information Technology). The IIITs should be a joint effort of Industry and Government.

Even if 5 such Silicon Cities emerge every year for the next 10 years, we could generate an additional revenue of half a billion dollars of software exports through each of these cities. This plan could collectively generate US $ 25 billion of additional annual software exports at the end of the next ten years.

5.10 Intelligent Cities

If India is to attract or even retain its best talent within the country, it will have to offer working and living conditions for Knowledge workers who are of international class. It will therefore be necessary that self-contained 'Intelligent Cities' be planned with high quality infrastructure including attractive surroundings, high speed communications access, uninterrupted power, clean and hygienic living spaces and reasonably priced and quality real estate for business and housing. It should be the aim of government to use such infrastructure to aggressively leverage Indian strengths for securing a dominant share of the emerging global market for R&D and technology.

An Intelligent City is taking shape at the outskirts of Hyderabad, starting with about five thousand acres and implemented through a consortium of international partners with a lead entrepreneur. The city could be planned using the best international talent and could be highly futuristic in conception and design.

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