(click image to see chart)
Trends in the nature of Indian Software
exports indicates the significant shift in services from providing personnel
alone - although this continues to account for a large proportion of business
- to undertaking deliveries of products and projects, much work on which
is done in India.This is eloquent testimony to the competence of Indian
software professionals.
India offers European companies, operating
in an increasingly competitive environment, the opportunity to derive competitive
advantages in their own markets.
The foreign investment policy in the software
sector is liberal and repatriation of investment and profits are freely
allowed. There are no restrictions on foreign collaboration agreements
or foreign technicians working in India.
Investment upto 100% is allowed automatically
for non-resident Indians and overseas companies owned by them. Other cases,
including setting up of fully owned subsidiaries in India, are specifically
approved by the Foreign Investment Promotion Board.
Special incentives are given to investors
setting up operations with a focus on the export market. Software Technology
Park (STP) units, Export Oriented units (EOU) and units in the Export Promotion
Zones (EPZ) can avail of these benefits. The investor is free to choose
the location under the first two schemes. A unit under the EPZ must be
located in one of seven designated zones.
Some of the incentives offered are:
-
Foreign equity upto 100% is permissible.
-
Except for prohibited items, duty free import
of all inputs, including capital goods is permitted.
-
Exemption from payment of corporate income
tax for a block of five years in the first eight years of operation.
-
After the five year block period, profits
on export would continue to be exempt, as per norms specified.
-
Units in the STP scheme have to meet an export
obligation in net foreign exchange terms equal to one and a half times
the CIF value of hardware imported and the wage bill incurred in India.
-
Such units can also import telematic equipment
without import duty. There is no export obligation on these imports.
-
Units in the EOU/EPZ schemes have to meet
a value addition of 60% (the ratio of net foreign exchange earned to gross
foreign exchange earned).
-
Access to domestic market upto 25% of the
production in value terms, after meeting the export obligation/ value addition.
The six OECD countries account for about 81%
of software exports from India. Today, about 60% of software services sourced
from India is by US companies. Many American companies have significant
software development facilities in India. Some of these are:
| Digital |
Dun & Bradstreet |
General Electric |
| IBM |
Motorola |
Oracle |
| Sun Microsystems |
Novell |
Unisys |
| Texas Instruments |
|
|
Europe accounts for about 20% of Indian software
exports. Some European companies have also established operations here,
either with Indian partners, and on their own. Examples are:
| Alcatel |
Baan |
Bosch |
| Britsh Aerospace |
British Telecom |
CRI |
| Daimler Benz |
Dansk Data |
Deutsche Bank |
| Ericsson |
ICL |
Maersk Data |
| Nokia |
Origin |
Philips |
| SAP |
SEMA Group |
Siemens |
Benefits the Indian
Software industry offers European companies
-
High quality: Take advantage of a quality
culture. Many Indian software companies are ISO 9000 certified; one has
even achieved SEI level 5.
-
Cost containment: Profit from internationally
competitive pricing. Many Indian companies execute fixed price contracts.
-
Timely delivery: Utilise large project teams
in India to meet tight schedules.
-
Increased working day: Harness the time difference
of 3 1/2 to 5 1/2 hours to pack in more hours! Work in India starts when
it is early morning in Europe.
-
Burgeoning domestic market: Tap into the exploding
(60% growth in 1994-95) domestic market.
-
Reliable communications: Install high speed
communication lines to better coordinate software development, and for
video conferencing.
-
A dependable partner to help you get started:
Use professional services from 3SE (established by the European Commission
and the Government of India) to identify, objectively, the right Indian
partners.
Back