| Software Development, IT-enabled Services and Telecommunications have emerged as niche opportunities in India through joint efforts of the Government and the industry. India has now the advantages of skilled manpower base, active and healthy competition amongst states in attracting investment in infrastructure as well as designing IT solutions in areas such as e-governance, e-learning, e-commerce, entrepreneurship, software exports growth and a large potential in the domestic market. |
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| SECTOR FACTS |
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Telecom subscriber numbers rose to 653.92 million users in April 2010, as per Telecom Regulatory Authority of India (TRAI) |
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Overall tele-density in India has reached 55.38 as on May 2010 (TRAI) |
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The Indian software and services exports is expected to reach US $ 49.7 billion in 2009-10, as per the Department of Information and Technology (DIT) |
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The IT and electronics production in India increased by an estimated 10.4 per cent to reach US$ 92.75 billion during 2009-10 (DIT) |
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| Investment Opportunities |
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| IT-BPO industry is expected to generate revenues of US$ 73.1 billion in 2009-10 as compared to US$ 69.4 billion in 2008-09, growing at a rate of over 5 per cent, according to a report by DIT. |
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| The Eleventh Plan targets Internet and broadband subscribers to rise to 40 million and 20 million, respectively, by 2010. |
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| The key thrust areas are: |
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Multi-purpose smart cards with PKI protection |
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Health informatics and telemedicine network |
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Collaborative ICT research in language technologies/ next generation internet technologies, bioinformatics, nanoinformatics |
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Telecom Infrastructure and equipment |
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| Investment Policy Updates |
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| According to the latest FDI reforms, |
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| IT & ITES |
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Business Services- 100 per cent FDI under the automatic route is allowed in data processing, software development and computer consultancy services; software supply services; business and management consultancy services, market research services, technical testing and analysis services |
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E-commerce activities: E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well |
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| Telecom |
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| FDI limit in telecom services is 74 percent subject to the following conditions: |
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This is applicable in case of Basic, Cellular, Unified Access Services, National/ International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added services |
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Both direct and indirect foreign investment in the licensee company shall be counted for the purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entity. In any case, the `Indian shareholding will not be less than 26 percent |
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FDI up to 49 percent is on the automatic route and beyond that on the Government route. FDI in the licensee company/Indian promoters/investment companies including their holding companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 percent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/or unfriendly entities |
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The investment approval by FIPB shall envisage the conditionality that Company would adhere to licence Agreement |
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FDI shall be subject to laws of India and not the laws of the foreign country/countries |
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| Source: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP) |
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 The only way to build inclusive growth and reach out to a population as large as India's is through technology. |
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Ganesh Natarajan
Chairman of IT and ITeS
Confederation of Indian Industries |
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| WHAT'S NEW |
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| MindTree has picked up the contract for Unique Identification (UID) project renamed as 'Aadhar' |
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| 3G and Broadband Wireless Access Services by private sector telecom companies apart from MTNL and BSNL to come up |
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