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Govt. paints rosy picture for Software, Services & Electronics Growth, but how realistic Is It?

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Sample this… Software and Services sector has the potential to grow to $105 billion by 2014 and $225 billion by 2020 from $58.7 billion in 2009!

Electronics and Hardware production in the country is expected to grow from $20 billion in 2009 to $100 billion by 2014 and $400 billion by 2020

I have to say I chuckled when I saw the growth forecasts and wondered if the number crunching dude in the ministry of State for Communications made a mess. Not to say that I won’t be happy if we achieve these targets but the likelihood of that happening sounds near impossible.

Yes, these are the growth targets suggested by Minister of State for Communications, Sachin Pilot. Call me a cynic, but even a specialist analyst firm like Gartner (which I think provides over optimistic forecast itself) does not make growth predictions of this scale.

What the minister of State for Communication & IT is essentially saying that the software and services sector will almost double every five years and electronics and hardware sector will quadruple every 4-5 years !!!

Who will facilitate these insane growth targets?

Apparently, a task force setup by the Department of Information Technology in 2009 is to recommend measures to foster and accelerate the growth of IT, ITES and electronics manufacturing. I could not find any specific measure suggested / implemented by the task force which has specifically led to any positive development in the sector.

On the contrary, IT/ITES sector has especially been seeing operating challenges in terms of policy driven modifications in taxation policies as such (not arguing that the policies have been unjust but have dampened the growth of companies in the sector).

What is also interesting is the contribution of exports and imports to the total market size. In the software and services sector the export component is expected to grow from $46.3 Bn (2009) to $82 Bn (2014) and $175 Bn (2020).

Similarly, for the electronics and hardware manufacturing the export component is expected to grow from $4 Bn (2009) to $15 Bn (2014) and $80 Bn (2020).

Industry Growth Rates

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Now, I would have to a certain extent bought the ambitious growth estimates had the ministry predicted that the growth is going to come from the domestic market.

However, the export component remains high and is expected to account for majority of revenues even in 2020. All this makes me ponder – Is the Task Force going to recommend measures to account for global challenges and ensure that the demand continues to rise for Indian software, services and electronics or Is The Ministry clueless of ‘China’?

This might sound like a rant but I don’t see the point in painting such a rosy picture without so much as putting valid reasons for the same.

What do you think of these growth numbers predicted? Can these be attained especially in times where the global economy is far from stable?

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