CHENNAI, INDIA: A Raja, Union Minister of communications and Information Technology, today 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.

He was speaking after inaugurating Connect 2009, India’s premier ICT event, being organized with the theme of “Resurgence of the Indian ICT Sector” by the Confederation of Indian Industry (CII), in association with Government of Tamil Nadu.

The Minister said that 2008-09 proved to be the year of transformation for the Indian ICT industry. The industry witnessed a process of re-engineering in response to the changing macro economic environment.

However, 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. The export of IT-BPO grew by 16 per cent to reach $47.3 billion during 2008-09. The growth proves that the basic business model of the Indian ICT sector is efficient. Raja said that the Central Government is focusing on developing semi-conductor fabric hubs across India in a big way. So far the Central Government has approved 7 to 8 projects with Rs. 70,000 crore worth of investment. In order to incentivize the semi conductor sector, the Central Government has decided to invest 20 per cent of the total cost of each of these projects.

On the side lines of conference he mooted the idea with the media that ICT which is presently in the central list of the constitution of India, must be brought into the concurrent list so that 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.

When asked whether spectrum allocation would be pushed to complete at earlier, he said the bidding process would be completed by December end and allocation will be done first week of January. He told to media that pre-bidding conference would be held on 10th or 12th of October.

In his Keynote Address, Kip G Thompson, vice president, Global Facilities & Strategic Growth, Dell Inc, said that there is a great opportunity for India to become the world class manufacturing hub for electronics and the greatest change agent. “India is in an inflection point. With right government incentives and policies, it can create an irresistible investment environment and become a world class IT hub globally” Thompson said.

Compared to its competing nations such as China, India has two additional advantages: proximity to European Middle East and African markets and English competency. However, the country needs to focus on investment in infrastructure development, improving regulatory efficiency, introducing fiscal incentives, stipulating domestic market demand, creating market for exports and taking initiatives to become a Green IT leader. He said that India’s export of electronic data processing and office equipment has to grow by over 37 per cent for it to reach the size of $1.2 billion by 2020.

Sharing his observations of changing trends in the ICT sector, Thompson said that the hardware price in India has come down by 55 per cent since 2004 – there has been a 46 per cent drop in hardware prices internationally. However, the laptop prices are 11 per cent higher in India, compared to that of global markets. The PC penetration is still 3.6 per cent in India.

He said that virtualization, mobility, software as a service, etc are some of the disruptive forces shaping the global ICT market. Globally the ICT sector contributes to 2 per cent of the carbon footprint. But IT can drive carbon avoidance by up to 5 times its carbon footprint in other sectors.

K Kanimozhi, Member of Parliament, Rajya Sabha, emphasized the need for inclusive development of the ICT sector.

Delivering the theme address, S Mahalingam, chairman, Connect 2009 and executive director and CFO, Tata Consultancy Services, said that despite the global economic downturn, the Indian ICT industry is 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 and it is likely to go down further to about 7 per cent in 2009-2010. In 2007-08, the ICT industry had created over 3,80,000 jobs but in 2008-09, it is likely to create only 1,00,000 jobs. Nevertheless, the domestic market growth will continue to be at 20 per cent.