IT and BPM

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Summary

Internet connections jumped from 25.15 crore in March 2014 to 83.69 crore in June 2022, registering a growth of 232%. *
The IT-BPM industry in India constitutes 8% of India's GDP. The industry is the largest employer within the private sector, employing 3.9 mn people. *
More than 500 mn people are estimated to be using smartphones in India, and three-quarters of them are online. Indians are also amongst the top downloaders of apps in the world. *
India’s e-commerce market is projected to grow at 18% annually through 2025. *
India is third largest Unicorn hub globally with a total valuation of USD 168 bn.
IT hardware is estimated to achieve INR 3 tn worth production in 4 years and domestic value addition is expected to rise from the current 5-10 % to 20-25 % in 5 years.
Computer Software & Hardware has emerged as the top sector during April 2021 with around 24% share of the total FDI Equity inflow.
The Telecom industry in India is the second largest in the world with a subscriber base of 1.17 bn as of August 2022 (wireless + wireline subscribers). *
India has an overall tele-density of 85.11 %, of which, the tele-density of the rural market, which is largely untapped, stands at 58.37% while the tele-density of the urban market is 134.78%. *
As on 31.01.2023, 5G services have been started in 238 cities distributed across all license service areas. *

Reasons to Invest

India’s IT-BPM industry amounts to 55% of the global outsourcing market size.
Favourable government policies and incentives facilitate investments in the IT industry.
There is a presence of skilled manpower, as India is home to 4.14 mn IT-BPM professionals. *
The National Broadband Mission of the Government of India is focused to fulfil the vision of 'Broadband for All' of the National Digital Communications Policy 2018. Under the mission, the following deliverables and outcomes are planned: *
- Provide broadband access to all villages by 2022
- Availability of high broadband speeds
- Increase present route length of 22 lakh km the Optical Fiber Cable (OFC) to 50 lakh km
- Enhance connectivity and improve Quality of Service by increasing tower density
- Increase fiberization of telecom towers from 30% to at least 70%
- Create a Geographic Information System (GIS) based tool and set up a National Fiber Grid to keep a mapping of entire OFC network in the country
- Facilitate rollout of 5G network and strengthening of 4G network
- Promote Make in India by promoting domestic manufacturing and incentivizing homegrown broadband products
- Rapidly growing urban infrastructure has fostered several IT centres in the country.
Computer Software & Hardware has emerged as the top sector during F.Y. 2020-21 with around 44% share of the total FDI equity inflow. *
GOI aims to create AI to improve Governance delivery, agricultural programmes, defence, security and intelligence related programmes, revenue/tax collection as well as programmes related to Justice and Law.
Cabinet approves a project for saturation of 4G mobile services in uncovered villages at a total cost of INR 26,316 Cr. *

Explore more about infrastructure availability in IT and BPM sector >

Key Achievements

Cross-border connectivity launched between UPI of India and PayNow of Singapore. *
IT to help MSMEs: Union Minister for MSME Shri Narayan Rane launched the MSME Competitive (LEAN) Scheme today which will help MSMEs implement LEAN manufacturing tools like 5S, Kaizen, KANBAN, Visual workplace, Poka Yoka etc under the able guidance of trained and competent LEAN Consultants *
Aadhar saturation at 94.65 % among all age groups and 9000 transactions carried out by holders till date. *
45 bn UPI transactions registered in FY 21-22, showing 8 times growth in last 3 years and 50 times growth in last 4 years. *
India climbs up six slots and now placed at 61st rank as per Network Readiness Index 2022. *
India secured 1st rank in “AI talent concentration”. *
India secures 2nd rank in “Mobile broadband internet traffic within the country” and “International Internet bandwidth”. *
India secures 3rd rank in “Annual investment in telecommunication services” and “Domestic market size”. *
India secures 5th rank in “FTTH/Building Internet subscriptions” and “AI scientific publications”. *
Rural tele-density jumps from 44% in March 2014 to 58% in October 2022. *
Broadband connections rose from 6.1 crore in March 2014 to 81.62 crores in September 2022 growing by 1238%. *
Hon’ble PM Shri Narendra Modi signed bilateral Memorandum of Cooperation (MoC) between India and Japan in the field of Information and Communication Technologies (ICTs). This MoC will boost opportunities for India to get into the global standardization process. This will further enhance human capacity building and development of the startup ecosystem which will contribute in realizing the objectives of Atmanirbhar Bharat. *
Asian Development Bank (ADB) and the Government of India signed USD 50 mn loan to boost West Bengal’s digital platforms for public finance reforms. *
MoU between ESC and BSE Ltd (earlier known as Bombay Stock Exchange) was signed (on 1st June 2021) to create awareness about benefits of listing among information and communications technology (ICT) SMEs and startups. *
CERT-In has partnered with the Common Vulnerabilities and Exposures (CVE) Program to strengthen trust in “Make in India” as well as to nurture responsible vulnerability research in the country. *
Advanced 650 teraflops supercomputing facility at National Agri-Food Biotechnology Institute is inaugurated at Mohali. *
Telecom Sector checked the data speed at the Mahatma Mandir 5G site of Gandhinagar, which was found to be about 1.5 Gbps - almost 100 times faster than 4G. The speed test was done on non-standalone 5G mode.
First Internet Exchange is established in the state of Uttarakhand to enhance and improve the quality of Internet and Broadband services in the state.
Telecom Department allots license and spectrum to Vodafone Idea Limited and Reliance Jio Infocomm for 5G testing in Gujarat.
First registration certificate issued for providing services as M2M Service Provider and WLAN/WPAN Connectivity Provider.
India Semiconductor Mission has announced an MoU between Cyient, WiSig Networks and IIT Hyderabad to enable mass production of "5G Narrowband-IoT- the Koala Chip, Architected and Designed in India".
Data centres in India attract investment of USD 10 bn since 2020.

Recent Announcements: 17th March 2023: MoS Rajeev Chandrasekhar inaugurates India offices of Salesforce and Truecaller.

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16th March 2023: Commercial Bank, a digital Bank in Qatar, announced the launch of UPI remittance service to India, becoming the first bank in Qatar to offer this service.

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10th March 2023: MoU on semiconductor Supply Chain and Innovation Partnership between India and US signed following the Commercial Dialogue 2023

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9th March 2023: Shri Alkesh Kumar Sharma launches IoT sensor products developed at C-MET, Thrissur.

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6th March 2023: Sikkim will have 5G connectivity by 15 August 2023: Sh. Ashwini Vaishnaw, Union minister for railways, communications and electronics and IT

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Statistics

The export by STPI registered IT/ITeS Units is valued at USD 80.3 bn for FY 2021-22. *
As per the data provided by National Association of Software and Service Companies (NASSCOM), the total amount of IT export from the country is USD 178 Bn in FY 2021-22. *
The industry has more than 17,000 firms; 8 of which 1000+ are large firms with over 50 delivery locations in India.
The IT-BPM industry is the largest private sector employer – delivering around 4.14 mn jobs. The industry accounts for more than 45% share in total services export from India.⁸
GOI aims to make Indian Electronics a USD 300 bn industry by 2025.
India emerging as the 2nd largest manufacturer of Mobile handsets in the world in volume terms, producing 30 crore handsets (2020-21) as against 6 crore handsets in 2014-15. Production of mobile handsets has grown from INR 19,000 cr in 2014-15 to 2,20,000 cr in 2020-21.
The number of telecom base stations in the country has grown from 6,49,834 (as on 31.03.2014) to 23,25,948 (as on 28.02.2022).
As on 31st December 2021, the mobile networks in India are serving more than 115 crore subscribers. Nearly, 98% of the population is covered with 4G network.
Internet users have increased to 80 crores from 6 crores in 2014. From less than 100 panchayats in 2014 now 1.7 lakh panchayats are connected by optical fiber. *
As on 31.01.2023, 5G services have been started in 238 cities distributed across all license service areas. *

Growth Drivers

300-acre Apple-Foxconn plant in Karnataka to catalyse electronics manufacturing and Deep Tech ecosystem in the state: MoS Rajeev Chandrasekhar *
MeitY has allocated INR 2,600 cr for the Incentive Scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions for FY 2022-23. *
Emerging geographies and verticals, non-linear growth due to platforms, products and automation.
Gati-Shakti Vision for Telecom Infrastructure – Right of Way Rules Amended for Faster 5G Roll-out.*
Revival in demand for IT services from the US and Europe.
Increasing adoption of technology and telecom by consumers and focused government initiatives – leading to increased information and communication technology adoption.
The use of IT in emerging verticals (retail, healthcare, utilities) are driving growth in the Indian IT industry.
Telecom Department gives go-ahead for 5G Technology and Spectrum Trials to cover rural, semi-urban and urban areas
Bharat Net project aims to connect at least 5 Wi-Fi access points in all 2,50,000 gram-panchayats (village councils) in the country.*
The government's Digital India Campaign envisages a USD 20 Bn investment covering mobile connectivity throughout the country, re-engineering of government process via technology and enabling e-delivery of citizen services.
Centre of Excellence on IoT and AI, a joint partnership of NASSCOM, MeitY and Government of Andhra Pradesh will provide open labs and infrastructure to create and validate solutions from design to prototype to democratise innovation. It also promotes entrepreneurship by providing an incubation facility for peer-to-peer learning and the benefit of an industrial environment.
National Internet Exchange of India launches ‘Digital Payment Gateway’ to increased ease of use for NIXI’s customers.
Number of digital transactions increase from 1,085 Cr in FY 2016-17 to 5,554 Cr in 2020-21, at a CAGR of 50.42%
CSIR and iCreate signs MOU to foster rapid economic development and help create world-class start-ups in India.
India and Germany agree to work together with focus on Artificial Intelligence (AI) Start-Ups as well as 'AI' research and its application in Sustainability and Health care.
C-DOT and Vodafone Idea Limited sign MoU to simplify IoT solutions deployment and bring standardization and interoperability among devices and applications as per oneM2M standard in the country.
Two MoUs were renewed articulating to new strategic direction for Indo-Canada S&T co-operation.
The project ‘Intelligent Solutions for Road Safety through Technology and Engineering’ (iRASTE) at Nagpur will identify potential accident-causing scenarios while driving a vehicle and alert drivers about the same with the help of the Advance Driver Assistance System (ADAS). The project will also identify ‘greyspots’, i.e., by data analysis and mobility analysis by continuously monitoring dynamic risks on the entire road network.
Mission Digital India Bhashini also aims to increase the content in Indian languages on the Internet substantially in the domains of public interest, particularly, governance-and-policy, science & technology, etc., which will encourage citizens to use the Internet in their own language.
Cabinet approves Memorandum of Understanding (MoU) between the Department of Science and Technology, India and Ministry of Trade and Industry, Singapore on Cooperation in the fields of Science, Technology and Innovation. *
A project is approved for saturation of 4G mobile services in 24,680 uncovered villages in remote and difficult areas. The project has a provision to include 20% additional villages on account of rehabilitation, new-settlements, withdrawal of services by existing operators etc. In addition, 6,279 villages having only 2G/3G connectivity shall be upgraded to 4G.*
Andhra Pradesh government planning for three IT concept cities in Vizag, Anantpur and Tirupati: Sh. Amarnath (State Minister, IT & Industries, Andhra Pradesh). *

FDI Policy

The government of India has allowed up to 100% Foreign Direct Investment (FDI) under the automatic route in the IT & BPM sector.
Hon'ble PM Shri Narendra Modi has approved the FDI proposal of INR 2480.92 cr in M/s. ATC Telecom Infrastructure Private Limited by M/s. ATC Asia Pacific Pte. Ltd.*
The cumulative FDI equity inflow in Computer Software & Hardware is USD 93.58 bn during the period April 2000 to December 2022. This constitutes 14.97 % of the total FDI inflow received across sectors. *

Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Schemes for Large Scale Electronics Manufacturing and IT Hardware for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.

Production Linked Incentive Scheme (PLI) for IT Hardware, Read More

Financial Outlay- INR 7,325 cr

For more details on PLI Schemes, Click Here

Sector Policy

Universal Service Obligation Fund (USOF) Scheme* :

USOF scheme is launched for provision of mobile services in Uncovered Villages of Aspirational Districts across five states of Andhra Pradesh, Chhattisgarh, Jharkhand, Maharashtra & Odisha. 7,287 uncovered villages of 44 Aspirational Districts across five States to get 4G based mobile services at the estimated cost of about INR 6,466 cr.

Prime Minister's Wi-Fi Access Network Interface (PM-WANI)* :

The Union Cabinet on 9th December 2020 has approved the setting up of Public Wi-Fi Networks by Public Data Office Aggregators (PDOAs) to provide public Wi-Fi service through Public Data Offices (PDOs). This will encourage technology entrepreneurs to develop and deploy Wi-Fi technology solutions triggering Make in India.

Production Linked Incentive Scheme (PLI) for IT Hardware* :

Hon’ble Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in IT and BPM Sector through the Department of Telecom of with a financial outlay of INR 12,195 crore over a five-year period for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
The scheme proposes PLI to boost domestic manufacturing and attract large investments in the value chain of IT Hardware.
The Target Segments under the proposed Scheme include Laptops, Tablets, All-in-One PCs and servers.
The total cost of the proposed scheme is approximately INR 7,350 cr over 4 years, which includes an incentive outlay of INR 7,325 cr and administrative charges of INR 25 cr.
Over the next 4 years, IT Hardware companies have proposed production of over INR 1,35,000 cr, and Domestic Companies have proposed a production of over INR 25,000 cr. The scheme is expected to promote exports significantly.
The scheme will bring additional investment in electronics manufacturing to the tune of INR 2,350 cr.
The scheme will generate approximately 37,500 direct employment opportunities in the next 4 years along with the creation of additional indirect employment of nearly 3 times the direct employment.
Domestic Value Addition is expected to grow from the current 5-12% to 16-35%.

Software Technology parks of India (STP) Scheme * :

Software Technology Parks of India (STPI), an autonomous society under Ministry of Electronics and Information Technology is implementing Software Technology parks of India (STP) Scheme.
100% export oriented Scheme for the development and export of computer software, including export of professional services using communication links or physical media.

Financial Support

UNION BUDGET 2022-23*

The total budgetary allocation for FY 2022-23 towards the Department of Telecommunications is INR 84,586.80 cr.
Budget lays down a clear roadmap for 5G spectrum auction and PLI schemes have been proposed for design-led manufacturing related with a strong 5G eco-system.

National Policy on Software Products (2019)*

A dedicated Software Product Development Fund (SPDF) with a corpus of USD 145.65 mn will be created in the form of Fund of Funds.

Software Technology Park Scheme *

Custom duty exemption
Excise duty exemption
Central Sales Tax reimbursement
Corporate tax exemption on 90% export turnover
Sales in Domestic Tariff Area (DTA) up to 50% of the Freight On Board (FOB) value of exports permissible.

Explore Government policies/schemes in IT and BPM sector >

Investment Opportunities

The setting up of IT services, BPM, software product companies, shared service centres.
Fast-growing sectors within the BPM domain – knowledge services, data analytics, legal services, Business Process as a Service (BPaaS), cloud-based services.
IT Services and fast-growing sectors within it such as solutions and services around SMAC (Social, Mobile, Analytics, Cloud), IT consulting, software testing.
Engineering and R&D within which the fastest growing sectors are – telecom and semiconductors.

Explore projects to invest in IT and BPM sector >

Sector Reports

Foreign Investors

Accenture (Ireland)
Cognizant (USA)
HP (USA)
Capgemini (France)
IBM (USA)
Atos (France)
Microsoft (USA)
CDNS (USA)
Intel (USA)
Dell International (USA)
Agilent Technologies (USA)
Mentor Graphics (USA)
Oracle Corporation (USA)
Qualcomm (USA)
Steria (France)
Ricoh (Japan)
SAP (Germany)
TIBCO (USA)
Philips (Netherlands)

Agencies

Sources

“Industry Performance: 2018-19 and what lies ahead,” NASSCOM, https://www.nasscom.in/sites/default/files/Industry-Performance2018-19-and-what-lies-ahead_0.pdf
“Catalyzing the Ecosystem for A Trillion Dollar Digital Economy,” NASSCOM, https://www.nasscom.in/sites/default/files/NASSCOM-annual-guidance-fy-2018.pdf
“Industry Performance: 2018-19 and what lies ahead,” NASSCOM, https://www.nasscom.in/sites/default/files/Industry-Performance2018-19-and-what-lies-ahead_0.pdf
“Strategic Review: IT-BPM Sector In India 2019: Decoding Digital,” NASSCOM, https://www.nasscom.in/knowledge-center/publications/strategic-review-it-bpm-sector-india-2019-decoding-digital
“National Broadband Mission,” Department of Telecommunications, https://dot.gov.in/sites/default/files/National%20Broadband%20Mission%20-%20Booklet_0.pdf?download=1
“India’s Share in World’s Commercial Services Exports Rise to 3.5 Per Cent in 2018: Economic Survey 2019-20”, PIB, https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1601248
“The IT-BPM Sector in India 2018 amplify digital,” NASSCOM, https://community.nasscom.in/download.php?file=wp-content/uploads/attachment/nasscom-itsr--executive-summary-2018.pdf
“Budget 2019-2020,” India Budget, https://www.indiabudget.gov.in/budget2019-20/index.php
“Home Page,” Startup India, https://www.startupindia.gov.in/
“Industry Performance: 2018-19 and what lies ahead,” NASSCOM, https://www.nasscom.in/sites/default/files/Industry-Performance2018-19-and-what-lies-ahead_0.pdf
“BharatNet Usage Status as on 20-05-2019,” BBNL, http://www.bbnl.nic.in/BharatNet.pdf
“Summary of Budget 2018-19,” Ministry of Finance, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=176062
“Highlights Of Interim Budget 2019-20,” Ministry of Finance, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=187934
"Summary of Union Budget 2020-21", PIB, https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1601475
“National Policy on Software Products (2019),” MeitY, https://meity.gov.in/writereaddata/files/national_policy_on_software_products-2019.pdf
“Software Technology Park of India,” Invest India, https://static.investindia.gov.in/Software%20Technology%20Parks%20%28STP%29%20Scheme.pdf
PIB, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1668396
PIB, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1675607
PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1677688
PIB Release, https://pib.gov.in/PressReleseDetail.aspx?PRID=1687591
PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1700431
PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1727552
Factsheet on FDI - April 2000 to March 2022, Department for Promotion of Industry and Internal Trade, https://dpiit.gov.in/sites/default/files/FDI_Factsheet_March_2022_23May2022.pdf

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