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India is known for it's software production and export. It has become a powerhouse in the global industry. It's hardware industry has yet to take off. Many of it's problems stem in tariffs and other barriers to trade. Software has been helped by the government in many ways. They have developed software technology parks. There has been a lot of foreign direct investment on this front. The government has given incentives in the form of tax breaks to many of the companies in this industry to help foster it's development.
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Here we can see a steady growth in the Indian IT-ITES industry. This growth was due to a strong labor pool and foreign direct investment.
| Software professionals in the ICT industry |
2001-02 |
2002-03 |
2003-04 |
| Software Exports sector |
170,000 |
205,000 |
260,000 |
| Software-domestic sector |
22,000 |
25,000 |
28,000 |
| Software-captive in user organizations |
224,250 |
260,000 |
280,000 |
| ITES-BPO |
106,000 |
171,000 |
245,000 |
| Total |
522,250 |
661,000 |
813,000 |
Source: NASSCOM
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We see a different story with exports. The graph here dips around the time the bubble burst in the dot com boom. Immediately after, however, the Indian IT-ITES export market picked back up and continued to increase. This is promising for India.
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With hardware we see an entirely different picture. It has been on a steady decline all throughout. Trade barriers and high costs of hardware have made it difficult for domestic production. The industry doesn't have the right incentives in place to produce domestically.
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