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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.

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.

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.

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.

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.

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.

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.

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

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