The Information Technology Industry in India- Problems, Prospects and Policy Issues with Reference to the Software Sector1

Abstract

THE HIGH-VISIBILITY success of Indian Information Technology (IT) industry has impressed the industry observers and researchers alike. Policy makers have started believing that the spectacular growth of software segment is an unexpected opportunity for Indian economy to grow along with the IT revolution. The success in the glamorous software segment and the dynamics of growth in the nascent domestic computer hardware industry are now giving way to more realistic assessment of strengths and weaknesses and its prospects for the future . The boom of the present computer industry is essentially driven by the impressive software export performance. However the hardware segment remains inward looking. The orientation of the domestic hardware market has emerged as a predominantly kit-assembling industry, which is heavily dependent upon the import of high-tech products and components. The historical performance of the hardware sector, however, had not been less commendable before. Brunner (1991) had shown how successive policy regime helped the Indian computer hardware industry achieve maturity in terms of technological competence. The domestic IT industry which was earlier dominated by the hardware sector has been rapidly shifting towards software. The share of hardware, which was about 60 per cent in 1994- 95 has dipped to 46 per cent in 1998-99. This has been accompanied by a sudden spurt in growth of software industry.