Press Note from Indian Electronics and IT Industry Associations

Task Force recommends measures to put I ndustry on growth path

• Envisions a USD1 40 billion electronics and USD 105 billion software & Services I ndustry by 2014
• Advocates setting-up of National Electronics Mission

New Delhi; December 11, 2009:  The Task F orce set up by the Ministry of Communications & IT, Government of India in August 2009 to suggest measures to stimulate the growth of IT, ITES and Electronics Hardware Manufacturing Industry in the country - today submitted its detailed Report to the Union Minister for Communications & IT, Government of India, Thiru A. Raja. The Task Force, set up in the backdrop of significant challenges being faced by the IT and electronics Industry owing to the global economic crisis, has suggested several measures to overcome the hurdles not only in the short-run, but also defined a roadmap for the industry in the medium and long-run. The Task F orce was chaired by Ajai Chowdhry, Member, Steering Committee, MAIT and Chairman & CEO, HCL Infosystems Ltd., and Co-Chaired by Kiran Karnik, Past President, NASSCOM. The heads of various Associations in the IT and E lectronics I ndustry were also members of  the Task Force.

Commenting on the objectives of the Task Force, R. Chandrashekhar, Secretary, Department of IT, Ministry of Communications & IT mentioned, “The Task Force, a first-of-its-kind joint Government-Industry initiative setup in the spirit of co-operation, endeavoured to seek an unfettered view of the IT and electronics industry. The aim was to chart a vision and recommend a suitable strategy for development and growth of all segments of the value chain of the ICTE sector in India for the next five years and beyond, with concrete and implementable recommendations/action points for making the industry globally competitive. The goal is to arrive at a shared Government Industry Vision of what the sector should aspire to achieve in next few years, particularly in terms of investment, contribution to GDP and employment.”

Delineating the vision for the IT & Electronics industry in India, Ajai Chowdhry, Chairman, Task F orce remarked, “The current demand in the Indian electronics industry stands at USD45 billion and is projected to grow to USD125 billion by 2014 and to USD400 billion by 2020, with exports expected to increase from the current USD4 billion to USD15 billion by 2014 and to USD80 billion by 2020.  As regards the IT/ITeS Sector, the domestic market currently stands at USD12.4 billion and is expected to grow to USD23 billion by 2014 and to USD50 billion by 2020, with exports expected to increase from the current USD 43.6 billion to USD 82 billion by 2014 and USD 175 billion by 2020. However, to achieve these ambitious targets, a definite action plan needs to be put in place by both the Industry and the Government . Further, some immediate measures also need to be taken to tackle the current sluggishness in the market. ”

Detailing the very inclusive approach adopted by the Task  F orce, Kiran Karnik, Co-Chairman mentioned, “The Task Force has come up with an exciting vision based on the potential of this vital sector to contribute to the country’s development and growth. The holistic exercise included a well-rounded analysis, not just of the various verticals of the I ndustry, but also by size of the organisation i.e. small, medium and large. The Task F orce looked at how IT could proliferate into rural India and aid inclusive growth, as also the multi-faceted dynamics of the I ndustry. For a detailed elaboration of the vision, the Task F orce constituted three sub-groups namely, Electronics Systems Design & Manufacturing (ESDM); Software & Services; and Strategic Electronics. Each provided insights on these crucial sub-sectors of the ICT value chain, while keeping in mind issues such as infrastructure, domestic market development, employment generation, exports, impact of international agreements & transactions.”

The key recommendations of the Task Force that cut across all the verticals are:

• Ensuring a favourable business policy and regulatory environment
• Building adequate basic, business and social infrastructure
• Harnessing technology for inclusive growth by driving greater efficiency, transparency and monitoring of employment and livelihood related projects, e-governance projects and developmental projects
• Fostering a sustainable ecosystem for innovation, R&D and manufacturing
• Catalysing growth in domestic market
• Invest in education and skill development to create a pool of high calibre talent so as to sustain India’s competitive advantage
• Access to funds for investments in R&D, Innovation and Brand India
• Encourage ‘Made for India’ designs, solutions and devices, local value addition and IP creation especially for developmental schemes, defence and strategic needs.

The Task F orce’s salient sector-specific recommendations are as follows:

Software & Services

• Establishing India as a trusted global hub for professional services - managing risks effectively
• Global trade development and actively advocating free trade in services, including the free global movement of service providers
• Maintain a globally competitive tax regime – extend Section 10A/10B and provide parity with SEZ scheme. Ensure incentives under Section 10A/10 B and SEZ continue after the direct tax code is introduced.

Electronics System Design & Manufacturing

• Establishing a ‘National Electronics Mission’ – a nodal agency for the electronics I ndustry within DIT and with direct interface to the Prime Minister’s Office (PMO). The nodal agency would help in the synchronized functioning of the I ndustry through effective coordination across Ministries and G overnment D epartments in the C entre and the S tates and would enhance the ease of doing business.
• Nurturing established electronics manufacturing clusters and develop them into centres of excellence, while encouraging new ones.

Strategic Electronics

• Focus on technology areas that need to be developed domestically as they are unlikely to be transferred by global players
• Identify and provide support in areas where the private sector can collaborate and provide superior execution capabilities to Defence Public Sector Units (DPSUs) such as fabrication
• Consider IT and Software capabilities as an enabling mechanism: significant changes are required to reform current organization and acquisition practices and fix issues such as the mismatch between technological planning & development
• Accelerate process by which private sector and indigenous participation happens. Initiate implementing the key recommendations from the Kelkar Committee Report on the following areas:
• Provide a level playing field for private players with the DPSUs
• Tighten offset clauses to provide for more effective technology transfer to India and enlist private sector participation in utilizing investments/business resulting from the offset clause

Expressing satisfaction on the inputs and recommendations of the Task F orce Report, Thiru A. Raja, Union Minister for Communications & IT remarked, “The Government of India has identified IT and electronics hardware manufacturing as a key thrust area. Developing IT and electronics products and solutions for inclusive growth is the need of the hour. Further, we are also keen to support the Software and Services sector for developing newer markets as also newer lines of services, even as they provide greater support to our social and developmental projects. In order to address the issues facing the Industry, the Ministry of Communications & IT will examine the recommendations, as contained in the Report and initiate a dialogue with various other concerned Government Ministries/D epartments, for appropriate implementation of recommendations on a fast-track basis. I am confident that the IT and E lectronics I ndustry in India will achieve its targets as envisioned by the Task Force.”