Wednesday, Dec 08, 2004
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By Our Special Correspondent
HYDERABAD, DEC. 7. The National Association of Software and Services Companies (Nasscom), President, Kiran Karnik, feels that the `future looks bright' for information technology and that it will cross $16 billion exports this year with a comfortable growth rate of 30-32 per cent.
However, there were serious concerns facing the industry, such as infrastructure constraints, appreciating rupee, human resource limitations, and security laws, which needed to be addressed immediately if India were not to lose the advantage, he said while addressing a press conference here on Tuesday.
Mr. Karnik said the industry could take a 2-4 per cent rupee appreciation but not 10 per cent (over a one year period) which could be a `disaster'. The association had spoken to the Government also urging it to ensure that the rupee "does not appreciate hugely, and if it does only slowly and steadily. Volatility is a problem and frightening." With 70 per cent of export market coming from the U.S., he felt that the small and medium enterprises might be hit if the appreciation was `too fast'. Many big companies de-risk themselves by hedging, but it was the SMEs (small and medium enterprises) that were of concern.
Customers were giving more of complex and mission critical work to Indian companies, but were voicing concern over lack of infrastructure such as airports, mass transportation, air connectivity, and power. The rate of progress was not satisfactory. This was visible more so in the case of Bangalore, he said. On the other hand, competition from China and East Europe was growing, he pointed out.
Mr. Karnik said the association undertook a `gap analysis' of security laws in relation to the U.K. and the U.S. laws. In two months, he expected the draft to be ready to be submitted to the Government for consideration. Several Indian laws needed further amendments to plug possible loopholes, he said. The cost of bandwidth was expected to drop 20-25 per cent this year, but still it was higher than in China, Malaysia and Philippines. The association was in dialogue with the Government on this aspect also, he said.
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