ICT sector faces competition from China, Brazil

Last Updated 29 January 2018, 18:24 IST

Even though  India's information and communication technology (ICT) services export declined during 2006 to 2016,  the  Economic Survey on Monday stated that  software services exports increased by 2.3% during the first half of fiscal 2018.

India's ICT share in total service export stood at 67% in 2016 and it was 68% in 2006.

The survey stated that  FDI inflow in the computer software and hardware sector reached $3.7 billion during the fiscal 2017 and it touched $3.3 billion in the first half of fiscal 2018.

The sector attracted 7.8% of the total FDI and registered a decline of 38.2%. It registered a growth of 116% during the first half of the fiscal 2018.

"The share of ICT in total services exports for India declined marginally during the decade (2006-2016), while the ICT share in total services exports has increased in economies like China, Brazil, Russia, Philippines, Israel and Ukraine...," the survey said.

The emergence of other geographies are happening at a time when there is a shift in technology landscape with the advent of digital and artificial intelligence making inroads every where.  ICT share in China's service exports grew from 22% to 40% between 2006 and 2016, while Brazil saw this contribution increase from 43% to 55%, during this period.

Notwithstanding the pricing pressure on traditional services and a challenging  global business environment facing domestic  software companies, the first half of the fiscal 2018 witnessed 2.3% growth in software services exports, a mild improvement over the previous period.

Citing RBI data, the Economic Survey said that software exports registered a growth of (-)0.7% in 2016-17.

Besides UK and European Union, the United States also accounts for 90% of India's ICT exports.  "While there are new challenges surfacing in these traditional geographies, demand from APAC (Asia Pacific), Latin America and West Asia is growing and new opportunities are emerging for expanding in continental Europe, Japan, China and Africa," it said.

IT-BPM sector employed nearly 3.9 million people in fiscal 2017, adding about 1.73 lakh people over fiscal 2016. The industry comprises over 16,000 firms that offer complete range of services, and over 4,750 start-ups, it added.

(Published 29 January 2018, 15:40 IST)

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