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May 18, 1999


North by North-North: Software and electronics exports maintain steady course on the growth chart. India's computer software, services and electronics exports in 1998-99 grew by 43 per cent in rupee terms and 29 per cent in dollar terms.

Exports rose from Rs 124 billion in 1997-98 to Rs 177.75 billion in 1998-99.

Email this story to a friend. This makes it the sector with the best export growth performance over the past five years, according to figures released by the Electronics and Computer Software Export Promotion Council.

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The ministry of commerce funds the ESC. Its executive director, R H Naqvi, claims that "The present growth in computer software and services exports results from major decisions taken by the government on issues relating to reduction of international telecom and leased line tariff, ADR, GDR linked stock option schemes and recognition of video software exports.''

The performance of the sector is likely to accelerate further because the cabinet has approved the setting up of a venture capital fund of Rs 1 billion. The exclusively information technology fund is to be built by the Department of Electronics in association with the Small Industries Development Bank of India.

Nineteen new countries including Malta, Zambia, Greece, Seychelles, Albania and Lebanon were added to the export destination list during the year.

The total number of export destinations increased from 66 in 1997-98 to 85 in 1998-99, indicating a 26 per cent growth.

The ESC survey indicates that exports to North America, the largest export market, has increased from Rs 38.80 billion (57 per cent share) to Rs 74.90 billion (60 per cent share) in 1998- 99.

In value terms, increase in software exports to North America over the last year is estimated at 93 per cent.

Similarly, exports to European Commission countries, the second largest market, has also increased from Rs 17.83 billion (26 per cent share) in 1997-98 to Rs 37 billion (30 per cent share) in 1998-99.

In value terms, software exports to this market increased by 107 per cent over last year.

Tata Consultancy Services, HCL Computing, Pentafour Software and Exports, NIIT, Infosys Technologies and Satyam Computer Services were some of the leading software exporters in 1998-99, the ESC survey says.

The electronics hardware sector though slipped 18 per cent over the previous year's performance, recording export revenues of Rs 24.75 billion in 1998-99.

ESC has blamed this drop in revenues to rapid technological changes in this sector and restructuring and recessionary conditions prevailing in some of the overseas markets.

Consumer electronics though has shown good performance in 1998-99 with a growth of 31 per cent over the previous year.

Exports of consumer electronics items is estimated to be Rs 8.5 billion in 1998-99 compared to Rs 6 billion the previous year.

Electronic components exports has also recorded a growth of 12.5 per cent in rupee terms in fiscal 1998-99 and is estimated to be Rs 9 billion (Rs 8 billion).

BPL, Kalyani Sharp India, Motorola India, Samtel Colour, Moser Baer India, and Sony India are some of the leading exporters in the electronics hardware sector in 1998-99, according to ESC.

Telecom services and projects export registered a marginal growth of 7.69 per cent in rupee terms in 1998-99 compared to the previous year.

In value terms, exports touched Rs 28 billion compared to Rs 26 billion in 1997-98.

The major export companies in this sector include TCIL, VSNL, VXL Engineers, CMS Computers and Bharat Electronics.

Stating that the next millennium would belong to the small and medium exporters of India, Naqvi said that the emergence of e-commerce within Internet services would provide new business opportunities for small and medium exporters especially in the IT-enabled services.

"Software is India's strength but IT-enabled services business is much larger and is also very important. This needs to be promoted through strong government support and policy framework,'' said Naqvi.

The current market size of IT- enabled services is estimated at $750 billion, which is double the size of the software and services market.

The electronics industry, though having the advantages of low labour costs and a highly skilled workforce, suffers from the lack of good infrastructure and archaic excise and customs policies, according to ESC.

Despite the government's initiatives in announcing the new electronics policy which eases many difficulties in SIL approvals, export clearances and reviews, still leave a lot to be desired in terms of facilitating exports through easier customs inspections, EDI implementations, Web commerce enablement etc, said ESC officials.

Outlining the promotional strategy, Naqvi said the council would try to establish counterpart relations with overseas organisations aimed at diversification of markets and development of new businesses.

The council has already signed 17 memoranda of understanding with counterpart organisations in principal export markets.

- Compiled from the Indian media

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