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Build the Building Blocks

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DQI Bureau
New Update

The mandate that the United Progressive Alliance (UPA) received from the

people of India in the last General Elections is one of the most clear that the

Indian electorate has given to any party/alliance in recent times. With the

expectations still running high, it is not going to be easy for the finance

minister, Mr Pranab Mukherjee, to do the perfect balancing act, when he goes on

to the present the Union Budget for 2009-10 in the first week of July.

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On one hand, there are the promises made to the aam aadmi that have to be

addressed; on the other, there is the immediate challenge of a global recession

and the Budget must be seen to be doing something that would boost the economy

immediately and the Indian industry. On one hand, there are pressing national

issues that require immediate action, such as national security; on the other,

the long-term priorities like bettering education and healthcare cannot be

overlooked.

Very often, the expectations from the industry also needs a delicate

balancing. Like the country itself, its industry is diverse and the needs and

expectations are very often diverse.

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Indian IT industry is no exception. In most countries, the local industry is

just the supply side of the market. Not so in India, which has an export

services industry that is two-third of the total IT industry. The part of the

industry that serves the domestic market is just the other one-third. This means

the needs are completely diverse. While the exports industrys consistent demand

is the governments continued policy measures that would keep them competitive

in the global market, the part of the industry focusing on the local market

expects the usual stuff like duty reduction and other such incentives.

When Dataquest decided to ask the CEOs and country heads of large IT

companies in India about what they expect from the new government, we expected

these diverse needs to come out. And they did. While the software services firms

want policy measures like continuation of STPI schemes, the domestic industry

expects more wide-spread deployment of IT in government services, something seen

as the best hope in a recession-hit economic environment.

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Yet, when it comes to the big message, it is anything but fractured. It is

almost unanimous, loud and clear: better infrastructure. Call it unity in

diversity if you like, but fifteen of the twenty-two CEOs that we asked said

creating better infrastructure should be the topmost priority for the new

government.

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Honorable Finance Minister, at least this communitythe global face of

Indianot just spares you from getting into another balancing act but

emphatically endorses what you yourself have outlined as one of your top

priorities: infrastructure. The IT industry is solidly with you on this one.

In early to mid-90s, when India was beginning to undertake the reforms with

prime minister Manmohan Singh driving the agenda as the finance minister, most

visiting senior executives from global companies would present Power Point

slides on what they perceived as Indias strengths and weaknesses. Some common

strengths were perceived as its demography, quality of education, and a free and

open society, infrastructure was always seen as a minus. Many even singled out

the infrastructure area that was considered most important for them (this

writer, of course, got to see more of the technology industry presentations):

telecom. Since then, telecom has got transformed completely and in turn, has

transformed India. Despite initial hiccups, telecom remains Indias only success

story in infrastructure. The challenge is to repeat that story in other areas of

infrastructure, more specifically roads, airports and powerthe last becoming a

top-of-the-mind issue for most of the industry, as they compete as equals in the

new global economy.

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However clich it may sound, the consensus message from India IT,

Incirrespective of whether they sell products or services, whether they sell to

Indian customers or overseas ones, whether they earn in rupees or dollarsis

that infrastructure is key.

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The Specific Expectations



The IT industry captains may agree when it comes to what they think is the

broader agenda before the government, but the immediate business concerns show

up, when it comes to specific policy thrusts in the realm of IT that they expect

from the government. As many as twelve out of sixteen CEOs from export-focused

companies that participated in the survey say the #1 step for the government

should be to extend the STPI scheme and incentivize the recession-hit export

services companies. Five out of six participating CEOs/country heads from

domestic-market focused companies say that the #1 government measure that would

help the IT industry is to deploy IT in all governance areas including citizen

services, intra-government functions and national security.

Since we spoke only to large companies, and in that base, there is a definite

skew towards export services firms, our sample also had a similar skew. As many

as sixteen companies were export-focused while only six were domestic focused.

However, some of them like Aegis and Intelenet do considerable business in both

India and overseas. While based on their revenue mix, they have been classified

as export-focused companies, their interest also lies in India where growth is

coming from and that arguably dilutes the skew.

Interestingly, if the question of what should be the top priority for the

government divides the industry along domestic-export lines, as the immediate

need overshadows the long-term thinking, when it comes to the next priories, the

industry is united again. As many as twelve of the CEOs, cutting across the two

camps, list intervention in the education system to sustain Indias competitive

advantage in talent supply, as their #2 or #3 choice when it comes to what

specific policy measures the government should take, pushing it to the #2

position in the combined wish list. Two of them say it should be the #1

priority.

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The top choice of the domestic industrymore spending by the government on

ITis a close third. With five #1 choices, investment in telecom infrastructure

comes in as #4 in the combined wish list. Some of them also feel that the duty

incentives for the domestic market should continue to grow the market. However,

not a single CEO thought it to be the most important measure.

While cyber security and strong cyber lawssomething that does not directly

impact the IT industry so muchexpectedly got a low score, what is noteworthy is

that few thought the government should do something to boost local

manufacturing. This was one of the most important points in the BJPs IT vision

document, as it was in sync with its digital sovereignty ideology.

Budget Expectations



As the finance minister Mr Pranab Mukherjee has indicated, the IT exports

industry may well get what it is demanding: extension of STPI scheme in some

form or the other. He is also expected to announce some measures for boosting up

primary and secondary education, which the entire IT industry sees as one of the

most important measures on part of the government, if India has to truly realize

its dream of becoming global services hub.

What, however, will be interesting to see is what budgetary provisions would

be there to dramatically increase adoption of IT in government.

But more important than all theseas the IT industry so unequivocally saysis

putting up the basic building blocks. What the government does to speed up

faster creation of basic infrastructure is something that will be closely

watched by everyone. Through this survey, the IT industry has conveyed that, it

is no exception.

Shyamanuja Das



shyamanujad@cybermedia.co.in

When it comes to IT, what are the most important tasks before the

government?

Vishnu R Dusad,



CEO & MD, Nucleus


Software
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Extending the STPI scheme by a further three years, which is slated to

    come to an end in March 2010
  • Promoting innovation and creation of Intellectual Property and National

    Innovation clusters. Enhanced focus of government in shaping the innovation

    infrastructure will help tap Indias large potential for creating wealth.

When it comes to IT, what are the most important tasks before the

government?

Phaneesh Murthy,



CEO, iGate
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Duty incentives for growing domestic IT market
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Create a multilateral policy that will allow free movement of IT

    professionals to different countries
  • Bring greater transparency in citizens interaction with different sections

    of the government through IT
  • Ensure regionalization of computing, ie, spreading the use of computers to

    citizens through local language applications

When it comes to IT, what are the most important tasks before the

government?

Kishor Patil,



CEO & MD, KPIT Cummins
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Extension of STPI scheme to small and medium enterprises to help them

    improve their liquidity position. The government should try to increase SEZ

    investments
  • The government should take proactive steps to increase domestic IT spend,

    by incentivizing IT implementations at Indian companies, public sector units

    and government enterprises
  • Steps should be taken to provide bigger bandwidth/ flexibility for Indian

    companies to build operations in tier-3 cities, thereby providing opportunity

    for multi-locational working

When it comes to IT, what are the most important tasks before the

government?

Aparup Sengupta,



CEO & MD, Aegis
  • Duty incentives for growing domestic IT market
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Ensure that the government creates a very healthy economic climate as the

    next decade of Indias IT/ITeS revolution will be in the domestic business
  • The government should focus on incentivizing this segment to propel growth

    in order to make this a $100 bn plus industry in the next ten years

When it comes to IT, what are the most important tasks before the

government?

PR Chandrasekar,



CEO, Hexaware Technologies
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions.
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Education system and talent supply
  • Infrastructure

When it comes to IT, what are the most important tasks before the

government?

Kris Gopalakrishnan,



CEO, Infosys
  • Extension of Software Technology Parks of India (STPI) scheme and other

    sops to boost recession-hit exports industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Extend the STPI scheme so that smaller companies can benefit from this in

    the current environment.
  • Make sure of the speed of decision making of government and clarify

    pending issuesfor example, taxation of SEZs.
  • Invest in building up the supply by improving higher educationgovernment

    can open education sector as it did with the industry in 1991.

When it comes to IT, what are the most important tasks before the

government?

Alok Ohrie,



president, India & SAARC, EMC
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions

What, according to you,are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Deployment of IT in the citizen services area will improve transparency

    and efficiency in governance
  • Encouraging IT oriented curriculum in our education system
  • Formation of an IT Task Force, which could be an apex body for the IT

    industry comprising representatives from the IT Ministry, academia and

    industry. IT organizations could approach the Task Force for any

    issues/recommendations/assistance they might require. The Task Force would

    then provide recommendations based on these inputs. This would further the

    cause of IT in the country by enabling greater participation from both the

    industry and the government.

When it comes to IT, what are the most important tasks before the

government?

Arun Jain, CEO & MD, Polaris
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Duty incentives for growing domestic IT market
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?



Current Tax structure is based on simultaneous schemes like STPI, SEZ,

FreeTrade Zone, Export Processing Zone and New SEZs. This is complex and

sometimes leads to ambiguous interpretations.

I would like to share just two suggestions:

  • Flat Tax structure for domestic and exports
  • Slab wise tax structure on Industry maturity

8% Tax rate for companies profits having over 1000 crore



12% for the companies having profits over 100 crore


8% for the companies having profits below 100 crore

When it comes to IT, what are the most important tasks before the

government?

Ravi Venkatesan,



chairman, Microsoft India
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Duty incentives for growing domestic IT market

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • The first one is building infrastructure, whether it is consistent power

    supply or broadband connectivity to schools, colleges, every village panchayat

    and the like. It is staggering to think that we are at less than 5 mn

    broadband connections todayand we generously define broadband that is

    anything above 56 Kbps. This has to change if we are to become an IT

    superpower in the real sense of the word. The IT industry is constrained by

    this problem of low connectivity, and if the government is thinking of an

    economic stimulus package, this would be a wise investment to make.
  • The biggest potentialas well as needfor IT to bring about a

    transformation is in the field of education and skill building. Providing

    access to skills training at a very large scale, ensuring high quality

    training resulting in effective mastery of skills, a low cost delivery

    mechanism and affordable solutions and devices are key issues requiring deep

    engagement and attention. Low cost computing devices, broadband access and

    using services through the Internet cloud will be key in overcoming these

    challenges. A connected focus will be to have trained teachers to meet the

    target of 500 mn trained people. Making ICT the primary enabler for driving

    quality in education by creating ICT enabled class rooms in 500,000 secondary

    schools by 2012 and 1 mn elementary schools by 2015 will be key. A laptop for

    each teacher is a must to enable ICT to not only ensure quality in education

    but also make education IT enabled. National PC programs for adoption of IT

    for teachers, students, civil servants, defence forces, etc, should be

    supported by the government.
  • The stated policy of the Government of India has consistently been one of

    technology neutrality and this has served the country well on its path to

    development by encouraging competition, choice and innovation. As technology

    evolves, innovation will lead to heterogeneous environments wherein different

    platforms will co-exist, and in this scenario, the country will be served well

    by focusing on interoperability.

When it comes to IT, what are the most important tasks before the

government?

Rohit Kapoor,



CEO, EXL
  • Intervention in the education system to sustain Indias competitive

    advantage in talent supply
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • The government should build systems that would help in creating a pool of

    employable graduates. The recession is a temporary and passing phase of the

    economy. When the economy is back on the track, there will be a surge in the

    demand for talent. Therefore, a proactive, approach based on public-private

    partnership model, on this front would be useful in capitalizing on the

    opportunities in the future
  • A lot has happened in the recent past in terms of infrastructure

    development including roads, public transportation, schools and colleges,

    telecom, power, etc, which is extremely important for a successful and smooth

    functioning of businesses. Nonetheless, we are still away from what can be

    called as a robust infrastructure, which would reduce some of the variable

    costs such as transportation and multiple power backup management cost.

    Further, most of the development activities have been limited to a few metro

    cities and their suburbs. The development should be extended to tier-2 cities

    because it would be helpful in bringing down other costs such as real estate

    costs. It would eventually help companies regain their competitiveness against

    emerging global locations
  • Bringing about transparency and minimizing red tape in SEZ policy

    implementation. Red tape is the biggest inhibitor in companies setting up

    their facilities in SEZs

When it comes to IT, what are the most important tasks before the

government?

Col Bedi, CMD, Tulip
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Necessary policy steps to boost local IT manufacturing

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Institutionalizing R&D with greater thrust towards product development
  • Broadband penetration
  • Incentivize organizations towards IT adoption

When it comes to IT, what are the most important tasks before the

government?

Ganesh Natarajan,



CEO, Zensar
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Duty incentives for growing domestic IT market

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

Governments in the past have so far played a stellar role through innovative

policies that have spurred the growth of the industry through the nineties till

it reached global dominance earlier this decade.

While some argue that the industry now has come of age and does not need

policy support like the STPI Scheme to sustain and enhance its leadership, this

is far from the truth. The biggest beneficiaries of the STPI scheme have been

the small, and medium sized companies and if the STPI and Section 10 A benefits

are withdrawn these small and medium scale industries will seize to exist. So

the new government should most definitely look at an extension of the STPI

scheme.

The new government should look at enhancing our education system if not

revamping it completely and should focus on collaboration with the industry to

develop a more robust education system right from the grassroots, as the time

has come for a new breed of business education in our country which is aimed at

building a new generation of business and technology analysts who can walk into

organizations within the industry and start contributing from the first day they

join the company.

When it comes to IT, what are the most important tasks before the

government?

Naresh Wadhwa,



president & country manager, India & SAARC, Cisco
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry

What, according to you,are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Announce a MEGA project to increase broadband penetration for the current

    level of 6 mn to at least 150 mn by the year 2014 (China is already at 75 mn

    today)
  • Monitor and execute the National e-Governance Plan (NeGP) on a mission

    mode and time bound manner and spend the $10 bn allocated for NeGP without

    delays
  • Use IT for improving delivery mechanism of government schemes and plug

    leaky pipes

When it comes to IT, what are the most important tasks before the

government?

Ravishankar G,



CEO & MD, Geometric
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Duty incentives for growing domestic IT market
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Increase competitiveness of Indian IT sector through continued export

    incentives, simplified SEZ regulations and faster service tax reimbursements
  • Promote technical education by starting more technical institutes or

    incentivize private sector participation through tax reductions or other

    benefits
  • Develop infrastructure to help the sector move to tier-2 and tier-3 towns

    to cut cost and leverage local talents

When it comes to IT, what are the most important tasks before the

government?

  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions

    R Chandrasekaran,



    president & MD, Cognizant

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?



We welcome the results of the countrys general elections, which bear yet

another testimony to our democratic credentials. A stable government at the

center augurs well for the country, given the difficult economic times the world

is passing through. The decisive mandate will enable the UPA government to

pursue aggressive policies for inclusive growth, and do so rapidly.

In addition to the imperatives of long-term policy measures to ensure the

sustainable development of the country, matters of infrastructure development

and security also call for meaningful action. Considering the significant

contribution that the Indian IT and BPO industries have made to the countrys

economy, we look forward to more proactive policy initiatives and extension of

tax and other benefits from the government to boost the competitiveness of the

industry and enable it to seize the opportunities thrown up by the changing

world economy.

Thus the three most important steps would be:

  • Proactive policy initiatives and extension of tax and other benefits from

    the government to boost the competitiveness of the Indian IT and BPO industry
  • Fresh impetus to infrastructure development (physical, educational, and

    telecom), not just in the key metros, but also in tier-2 and -3 cities
  • Boost security to discourage acts of terrorism and violence and help

    project India as a safe and secure IT destination

When it comes to IT, what are the most important tasks before the

government?

Susir Kumar, CEO, Intelenet Global
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax
  • Take necessary policy steps to boost local IT manufacturing

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?



Documentation time with regard to paperwork with regard to import of

equipment as this could lead to quicker turnaround time in the delivery.

When it comes to IT, what are the most important tasks before the

government?

Samir Yajnik, president global services & COO APAC, Tata

Tech
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Duty incentives for growing domestic IT market
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Extension of STPI scheme for another three years at least, together with

    laying better infrastructure
  • The government needs to provide maximum support to induce intellectual

    property development. Grants and financial support for R&D is required to

    build critical IP that would help fulfill global ambitions of IT companies
  • Cost arbitrage is not perpetual and Indian IT services firms cannot always

    depend on cost advantages to thrive. The government needs to take proper

    policy steps especially on the tax front to aid the growth of global IT MNCs

    from India

When it comes to IT, what are the most important tasks before the

government?

Ninad Karpe, CEO & MD, Aptech
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Duty incentives for growing domestic IT market

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Extension of the STPI scheme beyond the year 2012 will definitely help the

    Indian IT sector in facing the global recession (client losses, cut in

    retainers bill, cut in IT expenditures)
  • Investment and development of IT infrastructure
  • Promoting e-governance in government sector, education and public

    administration. Also deployment of technology for enabling web security

When it comes to IT, what are the most important tasks before the

government?

PV Kannan, CEO, 24/7 Customer
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Easing tax regulations: The taxes applicable for BPO and IT companies are

    at par with each other. The BPO industry is a smaller industry and the profit

    margins are lesser in comparison to the IT industry. Similar taxation applied

    for dissimilar industries will definitely affect the growth of the industry,

    especially during the current global economic recession. The government should

    re-evaluate withdrawing sops from STPI and providing the same to the SEZs. The

    BPO industry falls under STPI and hence will lose out on the benefits. These

    issues affect our competitiveness in the global arena.
  • Improving supply infrastructure: In terms of skilled workforce, though

    India has a vast number of engineers graduating every year, due to an outdated

    curriculum, there is an employability gap as the potential candidates are not

    industry ready.
  • Foreign affairs: Tightening of regulations by the US government

    specifically with respect to taxation on companies moving jobs offshore will

    have an impact on the IT/BPO industry and the new government must help ease

    the situation

When it comes to IT, what are the most important tasks before the

government?

Anurag Jain, MD, Asia Pacific, Perot Systems
  • Extension of STPI scheme and other sops to boost recession-hit exports

    industry
  • Intervention in education system to sustain Indias competitive advantage

    in talent supply
  • Acceleration of deployment of telecom infrastructure such as broadband and

    Wimax

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?

  • Extension of the STPI Scheme for a few years would bring back confidence
  • Duty incentives and SOPs for manufacturing of technology products/devices
  • Deployment of quality IT infrastructure and software in the delivery of

    services to the people by the government
  • The government should focus on furthering the national skills development

    agenda, which in turn will lead to holistic balanced growth, which would raise

    the purchasing power of the country and lead to long term sustainable growth

    of the IT industry

When it comes to IT, what are the most important tasks before the

government?

Anand Sankaran,



sr VP & head,


India & Middle East, Wipro
  • Deployment of IT in all governance areas including citizen services,

    security and inter governmental functions
  • Duty incentives for growing domestic IT market
  • Take necessary policy steps to boost local IT manufacturing

What, according to you, are the three most important steps that you want

from the new government that would help the cause of IT in India?



We would like to congratulate the new government on winning the elections

with a clear mandate. Having a stable government at the helm of affairs will

also provide a steadier impetus towards economic recovery. We are confident that

the government, led by Dr Manmohan Singh, will continue the reforms initiated

and provide astute economic foresight.

A few focus areas for the new Government could be

  • Encourage spending in the economy especially on public infrastructure like

    roads, power, transportation, etc
  • Control inflation to ensure that it does not mitigate the net growth
  • Speedy deployment of IT in all governance areas
  • Provide SOPs for R&D activities in IT which will create a treasury of IPR

    and built stability in this industry.
  • Provide duty incentives to the domestic IT market
  • Encourage local IT manufacturing
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