JEDDAH, 26 January 2004 — India’s population — 1.2 billion by 2015 — and its technologically driven economic growth virtually dictate that it will be a regional power. Like the US National Intelligence Council which has made this prediction, there are others, such as Swedish telecom major Ericsson, that are bullish about the Indian market. They believe that India will be one of the fastest growing markets in the world. “With some 26 to 28 million subscribers this year and an expected 50 million by year’s end, this is a 100 plus percent growth market,” the Swedish telecom major said.
The euphoria over Indian equities is not only reflected in the form of benchmark indices hitting lifetime highs. The strong showing of the Indian markets is also making its presence felt on overseas bourses. India’s growing political stability and rapid economic growth are proving attractive for venture capitalists who are looking beyond their traditional investment areas of software and back-office services.
It is now acknowledged that India, which has transformed itself from an aid-receiving country to an aid-giving country, is on the way to becoming an IT superpower. “We’ve decided to permit Indian Corporate to go global in the agricultural sector. The current restrictions on Indian corporations to undertake agricultural activities abroad, whether directly or through an overseas branch, will be removed,” Prime Minister Vajpayee said addressing a meeting of non-resident Indians in New Delhi a week ago. “The move will enable Indian companies to take advantage of global opportunities.” This means that Indian corporations can now freely invest overseas up to 100 percent of their net worth, thus lifting the current restriction of $100 million.
After two years of cost cutting and living with trimmed margins, the Indian software industry is once again on a roll. Most companies have announced improved business and revived predictions upward. Every Indian chief executive says two clear trends are emerging. Companies that have experienced offshore outsourcing are moving much more toward working offshore and those that have not experienced offshoring are taking to it vigorously, according to the commercial section at the Consulate General of India. As the boom era returns, even smaller companies are heavily investing in the future. Most companies believe the positive signs are not short term though the appreciating rupee is a matter of concern.
Meanwhile, as the country’s IT sector continues to boom, Bangalore is said to have finally overtaken its model in Silicon Valley. “Today, Bangalore stands ahead of Bay Area, San Francisco and California, with a lead of 20,000 techies, while employing a total number of 150,000 engineers. The southern Indian city, which commenced its R&D activities in 1986 when Texas Instruments set up its product engineering center there is currently home to the who’s who of the global tech fraternity,” says an official at the consulate.
Extolling the virtues of Bangalore as the IT capital of India, Karnataka Chief minister S.M. Krishna revealed recently that the current growth rate of 275 percent per annum would enable the state capital to emerge as India’s No. 1 business process outsourcing (BPO) player by 2006. “We understand that globalization is the key BPO driver. Today, many software services companies are tapping their existing client-base by offering BPO services. The opportunity lies in convincing existing and expanding call centers, looking at other destinations to foray into Bangalore.” What is happening to the IT sector is true of many other fields in the country’s business, trade and investment, officials say.