August 2007

The grand ambition…

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It is only in the last two decades that the state took major steps to promote ICT, including the creation of a World Market Policy focussing on software development for exports, telecommunications policy reform, privatisation of mobile phone markets etc. Fiscal policies have been important in stimulating the Electronics and IT sector through measures including exemption of export profits till 2010, and other tax holiday provisions. Under the Tenth Five Year Plan, an expenditure of $200 billion was laid out to boost India's IT infrastructure. The share of private companies in this was around $110 billion. The FDI inflow has not been impressive at least till 1999, when it amounted to about US$1115 million over 1.5 decade period. The distribution gains of these FDIs were also heavily skewed towards the originating countries.

The setting up of Software Technology Parks of India (STPI) in 1991 also provided a mojor thrust to the industry. The turnover of units in the STP centres, grew from Rs. 52 crore in 1992-93, to a staggering Rs. 51,458 crore in 2003-2004, and from Rs. 74, 019 crore in 2004-05 to Rs. 100, 965 crore during 2005-06. At the national level, STPI units account for around 97% per cent of software exports. Recently, the Government has accorded approval to the Special Incentive Package Scheme for semiconductor fabrication and other micro and nanotechnology manufacture industries in India. Special Economic Zones (SEZs) are being set up which provide, 100% Income Tax exemption on export profits for 5 years, 50% for next 5 years and 50% of ploughed back profits for 5 years thereafter. Domestic consumption of hardware and IT has however, not been consistent with the market potential.

The Government of India approved, in May 2006, the National e-Governance Plan (NeGP). It has a total of 27 Mission Mode Projects (MMPs) and 10 components, with an estimated outlay of Rs. 23,000 crore, to be implemented on a public-private partnership model. 

The CSCs form the core infrastructure component (the other two are State Wide Area Networks

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