Software Exports are the mainstay of India’s service exports. The IT-ITeS sector provides direct & indirect employment to a significant number of people in India. Data indicates that the four states of Karnataka, Tamil Nadu, Maharashtra & Telangana account for more than 80% of India’s software exports.
India’s IT-ITeS sector is a critical pillar in India’s economic growth story. With more than 15 million direct and indirect jobs created, the industry is also one of the greatest organised sector employers, contributing to a large extent to the country’s services exports.
The Indian IT industry is poised to bring significant changes in business models and technological offerings. Flagship policies for the IT industry and new-age startups can play a catalytic role in making India a global leader in software products while also realizing the Government’s vision of a $1 trillion digital economy.
In today’s story, we look at the performance of software exports from India and associated trends.
Measures taken to improve exports of Information Technology and enabled services (IT-ITeS)
Government acts as a critical bridge in enabling a well-functional information technology ecosystem. To realise this, successive governments undertook several measures to create and transform the ecosystem. Among them, Software Technology Parks of India (STPI) and Special Economic Zones (SEZ) are significant in employment generation as well as exports. One key difference between them is that SEZs are not sector specific, whereas STPIs are sector specific. A small brief about them is as follows.
Software Technology Parks of India (STPI):
With an objective to promote the development and export of software and software services including IT and ITeS, Software Technology Parks of India (STPI) were established in 1991 under Ministry of Electronics and Information Technology (MEITY). Since its inception, STPIs had been working towards equitable and inclusive IT-led growth thereby promoting IT-ITeS exports, Technology & Innovation and Software product development.
Special Economic Zones (SEZ):
The Export-Import (EXIM) Policy of India changed in 2000 to a new Special Economic Zones (SEZ) system, in which the Export Processing Zones (EPZ) were transformed into SEZs. The Special Economic Zones (SEZ) scheme was launched by the government to address the issues with the EPZ model. The SEZ Act was passed in 2005 and subsequent rules were made in 2006. Over time, SEZs have generated employment, investments, and exports. The SEZs have been around for a while, but in recent years, due to the globalisation of trade and financial markets, there has been a surge in interest in them on a global scale.
IT Software and services sector employs more than 5 million.
The Information Technology Software and Services industry is one of the largest employers in organized sector. The total direct employment provided by this industry rose from 2.96 million in 2012-13 to 5.1 million in 2021-22. Between 2020-21 and 2021-22, more than 4.4 lakh direct jobs were added. In addition to the direct employment, the industry also provides indirect employment to a tune of nearly 10 million people.
Exports from STPI almost tripled during the last decade.
There are 63 STPI units set up across the country, while an additional 22 STPI centres are approved by the Government of India. The overall exports by STPI registered IT/ITeS units increased from Rs. 20,051 crores in 2000-01 to Rs. 2,05,505 crores in 2009-10, marking a growth of almost nine times. However, post 2010-11, the growth rate has been relatively slow. The exports from STPI-registered units increased from Rs. 2,15,264 crores in 2010-11 to Rs. 6,28,330 crores in 2021-22, growing by nearly three times.
The bifurcation of the overall exports in 2021-22 shows that exports from units availing services under STP (under Foreign Trade (Development & Regulation) Act 1992) are Rs. 4,96,409.23 crores whereas exports from units availing only Softex attestation services is ₹1,31,920.42 crores.
Four states- Karnataka, Maharashtra, Telangana & Tamil Nadu account for more than 80% of India’s software exports from STPIs.
Looking at the contribution of states to software exports by STPI registered units, it is evident that four states of- Karnataka, Maharashtra, Telangana & Tamil Nadu tops the list in the software exports. Their cumulative contribution account for more than 80% of the total software exports from STPIs in India.
Karnataka has reinforced its reputation as an undisputed performer in the information technology ecosystem by accounting for more than one-third of the total exports from STPIs in 2021-22. This is followed by Maharashtra, accounting for twenty percent, Telangana at fifteen percent, and Tamil Nadu at ten percent. Between 2014-15 and 2021-22, exports from STPIs in Karnataka and Telangana grew almost at a same rate, while Maharashtra and Tamil Nadu registered a slower growth than these two states.
Software exports from SEZs cross seven lakh crores in 2022-23
A total of 270 SEZs are exporting currently. Out of this, 163 (60%) are IT/ITeS, 25 Multi product and 82 other sector specific SEZs. Approximately, 5,620 units have been setup in the SEZs till date. As mentioned previously, SEZs belong to multiple sectors. The total exports from all types of SEZs doubled from Rs. 4,63,770 crores in 2014-15 to Rs. 9,90,747 crores in 2021-22. Data provided by the Government of India in response to a RTI application filed by Factly indicates that the software exports from these SEZs grew 3.5 times from Rs. 2,12,019 crores in 2014-15 to Rs. 7,22,206 crores in 2022-23. The share of exports from IT SEZs out of the total exports from all SEZs rose from 45% in 2014-15 to 63% in 2020-21, before registering a marginal decline to 58% in 2021-22.
Karnataka and Tamil Nadu emerge as top performers in Software exports from SEZs between 2014-15 and 2022-23.
In exports from STPIs, Karnataka, Maharashtra and Telangana emerged as the top three performers. The state wise data of exports from SEZs between 2014-15 and 2022-23 reveal that Karnataka and Tamil Nadu stood as best performing states in the cumulative exports during this time period. From 2019-20, Maharashtra outperformed Tamil Nadu to emerge as second-best performing state after Karnataka. Between 2020-21 and 2022-23, the exports of software products from SEZs in Karnataka and Telangana grew at a faster rate (nearly 60% growth) than the ones in Tamil Nadu (47%) and Maharashtra (37%).
