Economic Survey 2018: After a year of contraction, software exports see positive growth in first half of 2017-18


Software exports registered a negative growth of 0.7 percent in 2016-17, and in the first half of 2017-18, it grew by 2.3 percent, as per the Reserve Bank of India data provided in the Economic Survey 2017-18, tabled in the Parliament on Monday.

The United States, United Kingdom and European Union account for around 90 percent of the total IT-ITeS exports, the Survey said.

“While there are new challenges surfacing in these traditional geographies, demand from APAC, Latin America and Middle East Asia is growing and new opportunities are emerging for expanding in continental Europe, Japan, China and Africa,” the Economic Survey noted.

The commentary is slightly more positive than last year’s Survey, which had pointed out the impact from Brexit and the US elections on the Indian IT sector. Rising protectionism in these big markets was also flagged as a concern.

Growth has been slowing in the Indian IT services industry as clients tighten their IT spending budgets and protectionist sentiment takes hold in its key markets. The wide adoption of artificial intelligence has also led to fears of mass layoffs.

In addition, the Survey also pointed out an increased competition for the industry. “The share of ICT (information and communication technology) in total services exports for India declined marginally during the decade (2006-2016), while the ICT share in total services exports has increased in economies like China, Brazil, Russia, Philippines, Israel and Ukraine indicating increasing competition for India from these countries,” the Survey said.

According to India’s IT services industry body, National Association of Software and Services Companies, the country’s information technology – business process management (IT-BPM) industry grew by 8.1 percent in 2016-17 to USD 139.9 billion (excluding e-commerce and hardware) from USD 129.4 billion in 2015-16.

IT-BPM exports grew by 7.6 percent to USD 116.1 billion from USD 107.8 billion during the same period. The e-commerce market is estimated at USD 33 billion, with a 19.1 percent growth in 2016-17, as per Nasscom data.

The IT-BPM industry in India employed nearly 3.9 million people in 2016-17, an addition of around 173,000 persons over 2015- 16, said the Economic Survey 2017-18.

The industry comprises 16,000 plus firms that offer the complete range of services with over 4,750 start-ups.

The Survey also pointed out that the government is taking several steps to promote the IT-BPM sector and generate more employment. Notable amongst these are: establishment of BPO Promotion and Common Services Centres to help create digital inclusion and equitable growth and provide employment to 1.45 lakh persons, mostly in the small towns; setting up a separate Northeast BPO promotion scheme with 5,000 seats and having employment potential of 15,000 persons.moneycontrol