Union Minister for Communications and Information Technology A. Raja on Friday said his Ministry favoured extending the tax benefits enjoyed by the Software Technology Parks of India (STPI) registered Information and Communication Technology (ICT) units to three more years and the proposal was pending Cabinet approval.
Mr. Raja was delivering the inaugural address at Connect 2009, organised on the theme of “Resurgence of the Indian ICT Sector,” in Chennai.
He said the State governments should be given equal responsibility and opportunity in bringing in proactive policies and regulations related to foreign investment in the ICT sector. The 2008-09 period proved to be the year of transformation for the sector. It witnessed a process of re-engineering in response to the changing macro economic environment.
Despite the global economic meltdown, the Indian IT and BPO sector grew by 12 per cent in the financial year 2009 to earn aggregate revenue of $ 71.7 billion. Their exports grew by 16 per cent to reach $ 47.3 billion in 2008-09. The growth proved that the basic business model of the Indian ICT sector was efficient.
The Union government, Mr. Raja said, was focusing on developing semi-conductor fabric hubs in a big way. So far it had approved about eight projects with Rs 70,000 crore worth of investment. It had decided to invest 20 per cent of the total cost of each of these projects.
Speaking on “Broadband Roadmap for Inclusive Growth: India 2009-2014,” Manoj Kohli, chairman, CII National Committee on Telecom and Broadband, and CEO & Joint Managing Director, Bharti Airtel Limited, said that in the last 10 to 15 years, the telecom sector had created half a billion customers and reached connectivity to 4.5 lakh villages, thus becoming the second largest growing telecom market in the world, second only to China.
The sector can bring back India’s GDP growth from the current 6 per cent to 9-10 per cent. Broadband was key to economic growth and its penetration had strong correlation with GDP growth. In India, the broadband penetration was just 0.57 per cent. Though there were over 500 million telecom users, there were only seven million broadband customers – at present 1 per cent of the households and 18 per cent of businesses have access to broadband.
For the government to achieve the 2014 vision of reaching broadband to 214 million users by 2014, it needed a 30-fold growth. As broadband had the potential to create about 20 million jobs, the government should be committed to e-governance projects and move from providing voice-led to data-led services.
Mr. Kohli said the levers for growth include investment in laying down high speed back haul via Fiber to the Kerb infrastructure across the country using Universal Service Obligation and investment in wireless broadband. The broadband revolution in rural areas would create the world’s single largest market of 700 million people, and hence it would be bigger than the urban telecom revolution.
Delivering the theme address, S Mahalingam, Chairman, Connect 2009 & Executive Director and CFO, Tata Consultancy Services, said that despite the global economic downturn, the Indian ICT industry was less affected. However, the compound annual growth rate, which was 27 per cent in 2007-08, had come down to less than 20 per cent in 2008-09. It was likely to go down further to about 7 per cent in 2009-2010. In 2007-08, the ICT industry created over 3,80,000 jobs, but in 2008-09, it was likely to create only 1,00,000 jobs. Nevertheless, the domestic market growth would continue to be 20 per cent.
C R Swaminathan, Chairman, CII Southern Region & Chief Executive Officer, PSG Industrial Institute, welcomed the gathering. C.K. Ranganathan, Chairman, CII Tamil Nadu & Chairman and Managing Director, CavinKare Pvt. Limited, offered concluding remarks.
A CII report on “India 2009-10: Broadband Roadmap for Inclusive Growth” was released by Mr. A. Raja on the occasion.