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NASSCOM Representation on IT/ITeS Sector Action Plan under Champion Service Sectors Scheme

Earlier this month, and in response to a request from the Department of Commerce (DoC), NASSCOM submitted its recommendations relating to potential measures to benefit the IT/ITeS industry under the Champion Service Sectors (CSS) Scheme.

The CSS Scheme, which was approved by the Union Cabinet in 2018, seeks to enhance the competitiveness of twelve “champion service sectors”, including the IT/ITeS industry, and promoting GDP, growth, employment and exports through focused and monitored action plans.

NASSCOM’s recommendations, submitted for the benefit of the Committee of Secretaries (CoS) monitoring the CSS Scheme, places emphasis on medium to long term interventions. Given the backdrop of the ongoing novel coronavirus outbreak, the recommendations maintain a special focus on recovery, building resilience and business continuity, and prioritising sustained growth of employment and exports for the industry.

Background

The past decade (FY2009-FY2019) saw the industry cross USD 150 billion in revenues, standing at USD 177 billion in FY2019. Employee workforce addition was again close to 2 million people, a 1.8X growth. This figure has since grown to USD 191 billion in total revenues as of FY2020. NASSCOM expects these growth trends to continue over the next decade, on the back of growing demand, and a conducive regulatory environment.

However, the ongoing novel coronavirus (SARS-nCov2) pandemic has necessitated a fresh look at the strategic outlay for the industry in the short to medium term. The pandemic has led to the disruption of several global value chains, and this in turn has caused a shift in demand towards the Indian IT/ITeS industry. At the same time, there are constraints being faced by the industry in terms of ensuring business continuity through the course of pandemic, thereby impacting the ability of the industry to service the growing demand.

To look forward into the next few months, it will therefore be critical to message to the world that the Indian IT/ITeS industry remained resilient through the crisis and will continue to be resilient both in its operations and growth over the next decade.

Accordingly, while NASSCOM’s representations are intended to be a forward-looking set of measures that can facilitate medium to long-term growth in the IT/ITeS industry, focus has been retained on building resilience. The document also keeps in focus the next anticipated wave of growth from the IT/ITeS industry, which we believe will be driven significantly by Micro, Medium and Small Enterprises (MSMEs) and Start-Ups focusing on IT products.

Summary of Recommendations

(1) Improving Ease of Doing Business in the IT/ITeS Sector.

Ease of Doing Business and Export Promotion have been concurrent themes of almost all major Government policies in the recent past, including the CSS Scheme as well as the National Software Products Policy (NSPP). The Indian IT/ITeS industry has benefited hugely from the resultant introduction of light touch regulation, and other policy efforts that have rendered greater ease of doing business to the sector.

However, certain other measures that are currently in place, also merit a re-look, given especially the peculiar nature of the industry, and the speed of its operations. Granular compliance requirements, and paper-based processes, that do not suit the context of the industry, should therefore be done away with.

(2) Export Promotion

Existing export promotion schemes under the purview of the Ministry of Commerce, have thus far faired exceptionally for the Indian IT/ITeS industry’s export performance. However, the future of these schemes is uncertain, and NASSCOM believes that the continuance of these schemes is crucial to sustained growth of exports for the industry.

(3) Public Procurement and Domestic Demand Stimulation

As the Government moves towards the third phase of e-Governance service delivery, and explores novel architectures such as the National Open Digital Ecosystem (NODE), public procurement of Indian IT products and services to aid this transition, will not only catalyse domestic demand for IT services, it will also enable the Government to leverage the resulting efficiencies.

Moreover, measures taken in this regard, also promise to provide a significant catalyst to the growth of IT MSMEs and Start-ups, who are projected to drive a significant share of growth for the industry over the next decade.

(4) Investment Promotion

In the aftermath of the crisis, there will be a need to stimulate investment, while repositioning the Indian IT/ITeS industry as a resilient and competitive player in the international market. Moreover, given the shift in demand patterns, that are likely to be witnessed in the aftermath of the current emergency, there is a unique opportunity re-position the Indian IT and ITeS industries as a global hub for IT products, in addition to services.

(5) Business Continuity, Resilience and Future of Work

For the IT/ITeS sectors to be resilient and competitive globally, it is essential for the industry to have robust and effective Business Continuity Plans (BCPs). These are imperative in times of natural emergencies (such as the current pandemic) or even economic slowdowns and recessions. Moreover, given the lessons being drawn from the current crisis, and the on-going transition to remote work in the absence of physical spaces, there is a unique opportunity for new business models to emerge – that are both resilient and cost-optimized.

Should you have any questions about NASSCOM’s representations on the CSS Scheme, please write to indrajeet@nasscom.in.

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