Andhra reducing dependency on US for IT exports

Source: EconomicTimes
In an attempt to insulate itself from the slowdown, the IT/IT enabled Services (ITeS) sector in Andhra Pradesh is reducing its dependency on the US and focusing on other markets for exports, an industry official said on Thursday.

The US accounted for 52 percent of total IT/ITeS exports of the southern state in 2008-09, down from 61 percent the year before and 69 percent in 2005-06. The state registered 24.5 percent growth in its total IT/ITeS exports last year. "The dependency on the US market has come down. The sector is looking at other geographies," said STPI Hyderabad director P Venugopal.

The share of Europe has gone up from 20 percent in 2007-08 to 26 percent last fiscal. The share of other markets also increased from 15 percent to 18 percent while it remained unchanged at 4 percent for Asia Pacific and the Middle East.

IT services account for 55 percent of total exports of the state in 2008-09, compared to 50 percent the year earlier. The share of ITeS/BPO (business process outsourcing) has come down from 26 percent to 20 percent last year.

Enterprise applications and others account for 25 percent as against 24 percent in 2007-08. Andhra Pradesh added 69 new IT/ITeS units under the STPI scheme during the year. These include nine foreign companies. "One unit was added every week on an average and 22 units registered under the SEZ scheme," Venugopal said.

Under the STPI scheme, introduced a decade ago, IT and IT enabled services (ITeS) firms are exempted from paying taxes on their profit from export of software and services. The 10-year scheme was extended by a year to fiscal 2009 for its multiplier effect on the burgeoning IT industry.

The projected investments by the newly registered companies under the STPI scheme are Rs 510 crore. The IT/ITeS sector created 12,786 jobs last year. STPI claimed that the direct employment in the sector has increased to 251,786 in 2008-09 from 239,000 the year before.

Out of 350 IT/ITeS SEZs approved in the entire country, 59 will come up in Andhra Pradesh. The state has also notified 39 SEZs and 12 SEZs had already started functioning. The SEZ units have made an investment of Rs 3,739.29 crore, while the projected investment in five years is Rs 16,069.17 crore. The direct employment in SEZ units is 15,029 and the projected manpower in five years is 328,442.

Venugopal said the STPI planned to develop Andhra Pradesh as the future product destination in the country. "We have already identified 250 to 200 companies and also the products. Our priority is to showcase the strength of small and medium enterprises," he said.