The sector is likely to bounce back in the long run as many global companies plan to move out of China
The financial package and special accommodation to the MSME sector will benefit small and mid-size companies in ICT sector
NEW DELHI: India may miss the electronics and software exports forecast of $155 billion for 2020-21 as several sectors, including airline, hospitality and banking, in traditionally strong markets like the US and Europe have been severely hit by the covid-19 pandemic, Electronics and Computer Software Export Promotion Council (ESC) has said.
“Keeping in mind the demand and supply disruptions caused by covid-19 both in India and in the main export markets, uncertainty related to the impact of the virus and how long the virus will be with us, we are carefully looking at the target set to reflect ground level situation," Sandeep Narula, Chairman, ESC said in the statement.
Though Indian information and communication technology (ICT) companies have managed to keep operations running by encouraging employees to work remotely, exports will be adversely affected resulting in short-term losses. However, Narula feels, the sector is likely to bounce back in the long run as many global companies plan to move out of China, and India may emerge as an alternative destination.
Narula said government support will be key to the revival of the ICT sector. The financial package announced by the prime minister and the special accommodation given to the MSME sector by the finance minister under the sectoral package will benefit small and mid -size companies in the ICT sector.
The decision of some of the state governments to proactively reform the labour laws for setting up of new units has the potential to attract a large number of multi-national corporations looking for relocation from China.
“A policy framework has to be fine tuned to promote backward integration since, as of now, companies are migrating from CKDs (completely knocked down) to SKDs (semi-knocked down) assemblers. Promoting backward integration will help us to move in the value chain and in creating a large number of employment, besides accelerating exports," adds Narula.
Narula also said India can be an important hub for Internet of Things or IoT development by leveraging the strong position in software development. ESC has commissioned a study to assess the potential of IOT-based solutions in export markets.
Recent report by Gartner also estimates that global IT spending is expected to shrink by 8% in 2020 due to covid-19. The emphasis on cost optimisation will force CIOs to limit investments to only those technologies that are business critical.