Software Industry and Exports

 

India's export of software services stood at US$ 128.6 billion during 2019-20, registering 9.1% growth over the previous year. Exports of computer services and ITES/BPO services contributed 66.6 per cent and 33.4%, respectively, of the total software services exports.

The IT & Electronics industry is one of the fastest-growing industries in India, both in terms of production and export. In fact, software development and IT-enabled services have made India’s brand equity a force to reckon with.

 

Information Technology and Business process management (IT-BPM) industry revenue grew 7% y-o-y to reach US$ 191 billion in FY20 and is estimated to grow to US$ 350 billion by 2025. Moreover, revenue from the digital segment is expected to account for 38% of the total industry revenue by 2025. Digital economy is estimated to reach US$ 1 trillion by 2025. The domestic revenue for the IT industry was estimated at US$ 44 billion and export revenue was estimated at US$ 147 billion in FY20.

 

By 2020, the Government of India aims to empower at least one person per household with digital literacy skills. For the same, the Government has launched various digital skilling initiatives that are aimed at empowering citizens with the knowhow of using IT and mobile devices.

 

The electronic goods export between April 2020 to February 2021 was US$ 9.71 billion and for the month of February 2021 it was US$ 1.10 billion.

 

By 2022, the IT industry in India is expected to increase employment to about 2 million direct hires and 7.6 million indirect hires.

 

India has a favorable Government policy and regulatory support for the electronics & IT industry.

 

The industry offers a range of services, from low-end application development to high-end integrated IT solutions across multiple verticals, with a well-developed vendor base.

 

The Indian IT & software industry adheres to quality processes and standards, with most companies aligning operations with international standards.

 

Software technology parks and special economic zones in India provide an affordable real estate space for IT companies.

 

The Government has a strong focus on transforming the country into cash-less economy. Various Government incentives such as referral bonus scheme to promote the use of BHIM, zero service tax on railway tickets booked online and launch of Aadhaar-based mobile apps are aimed at encouraging digital payments in the country.

 

On May 2019, the Ministry of Electronics and Information Technology launched the MeitY Start-up Hub portal.

 

The Electronics and Computer Software Promotion Council (ESC) was formed to provide a platform for India’s IT & electronics industry. With exports to more than 200 countries, ESC has successfully steered the direction of India’s electronics and software exports. ESC offers a comprehensive database of industry companies, and products and capabilities of all major players.

The council facilitates import/export collaborations, joint ventures, sub-contracting tie-ups, and technology transfers for industry players.

 

It provides access to published reports on markets, products and trade statistics, business opportunities, and government policies.

 

The IT-BPM industry in India stood at US$ 191 billion FY20.

What promotes the exports of software export? 

The final section examines some of the steps taken by national governments to stimulate software export: subsidizing telecommunication, establishing research institutes and university programs, offering tax and financial incentives, reducing trade barriers, planning and coordinating industry efforts, marketing.

What do you mean by export marketing?

Export marketing is the practice by which a company sells products or services to a foreign country. Products are produced or distributed from the company's home country to buyers in international locations.

GST on IT sector will attract 18% on software services provided by software companies. For purely software services, the cost of such services will increase under GST.

IT industry body Nasscom on Thursday said the sector continues to be a net hirer of skilled talent, and that the top 5 Indian IT companies are planning to add over 96,000 employees in 2021-22.

The statement comes in the backdrop of a report by Bank of America that said domestic software firms are set to slash 3 million jobs by 2022 as automation gains pace across industries, especially in the tech space. 

"With the evolution of technology and increasing automation, the nature of traditional IT jobs and roles will evolve overall leading to creation of newer jobs. The industry continues to be a net hirer of skilled talent, adding 1,38,000 people in FY2021," Nasscom said in a statement.

 

According to the data available with the government in May, India’s exports reached $50.7 billion during the first seven weeks of the fiscal year, 11% higher than the corresponding period in 2019-20.

 

The PLI (production-linked incentive) scheme for this sector has helped India in a huge way. We are wasting around 30% of fruits and vegetables. This can change if we bring proper technology into this sector through FDI (foreign direct investment).

 

The soaring prices have resulted in around 10% growth in exports. We have done particularly well in exports of iron and steel, copper and various other metals. The same goes for cereals as well. But it's a very delicate situation. On the one hand, we see exports booming, on the other, it creates problems for the downstream processor because high steel prices have hit the engineering sector. We should have a strategy where we can focus on value-added exports and attract investment. A medium- to long-term process is required here.