India underinvested in IT capital: Nasscom

NEW DELHI: Despite being a global IT leader in software services, India is underinvested in IT capital on the home front. According to a NASSCOM report, currently, India's IT capital share is 3.5 percent of total capital invested in the country. This is the lowest vis-à-vis the average IT capital share of 5.7 percent amongst the other eight countries that are underinvested in IT. While among the 21 economies identified as invested in IT, the average IT capital share is 23.9 percent.






According to the report, to increase IT usage within the country, it is essential to increase the domestic IT uptake. For India's economy to become invested in IT capital, the government must develop and implement policies that promote investment in IT by businesses, households, educational institutions, and the government itself. Policies should focus on promotion of software asset investment in India.





The report also states that IT uptake positively impacts all countries - developed and developing - effecting an average high of a 3.6 percent increase in GDP and an average of a four percent greater contribution to labor productivity thereby spurring economic growth.





Benefits of IT are least dispersed in India relative to other economies under invested in IT including China. According to the report, this is primarily due to low PC penetration (seven PCs per 1000 people), low Internet penetration (16 Internet users per 1000 people) and limited number of secure Internet servers ( 0.3 secure Internet servers per one million people).





The research "Information Technology in the Economy of India" was conducted by Sallstrom Consulting & Nathan Associates Inc and supported by Microsoft Corporation India Pvt Ltd. Government of India Planning Commission deputy chairman Montek Singh Ahluwalia released the report.





Commenting on the report, NASSCOM president Kiran Karnik said, "In India - the private sector, the government, and academia all have spent significant time and resources focusing on developing the potential of India's software industry. Given its great success, we know that - with time and attention - it is possible to grow the domestic industry and increase domestic IT uptake. A private - public partnership between the government and industry could greatly accelerate growth rate, with big economic and social benefits."