Construction Mirror Article detail

India is recognized as a powerhouse for knowledge and is the driving force behind information technology’s popularity on a worldwide scale. India’s economy relies heavily on the sector, which contributes significantly to both the GDP and the nation’s general well-being. It is expected that by 2025, the IT sector’s contribution will be about 10% of India’s GDP, up from 8% in 2020.In FY22, NASSCOM reported that Indian IT sector sales were US$ 227 billion, a 15.5% increase year-over-year. A total of 50 lakh workers were added to the IT sector in FY22, bringing the total to 4.45 lakh.India’s IT sector has come a long way since the 1980s when the government introduced new initiatives and passed lenient regulations. Today, the industry delivers high-end services to organizations all over the world, ranging from cloud computing and digital payment infrastructure to cyber-security, IT strategy, and consultancy.

 

The Landscape

 

The early IT wave witnessed a boom in key Tier-1 cities like Bangalore, Hyderabad, Chennai, etc. The primary reason for this cluster was the availability of favorable conditions for expansion, such as superior infrastructure, government policies, and skilled labor, among others.

 

However, many metropolitan cities have reached their saturation points as growing urbanization has depleted their resources. As a result, Tier-II & III cities have been handed over the baton for the IT sector in India.

 

Furthermore, to offset the combined effects of rupee appreciation and the expiry of the Software Technology Park of India (STPI) project, IT and ITES are relocating to Tier-II and III cities in the hopes of reducing operational expenses by 15%.

 

With metropolitan cities like Bangalore already saturated, Tier-II and III cities have emerged as new development zones in recent years. These cities’ infrastructure upgrades have made them desirable investment locations for IT/ITES.

 

To keep ahead in the digitalization process, state governments have established industrial clusters, SEZs, and different skill development efforts to attract IT businesses and offer a favorable atmosphere.

 

Why Gujarat?

 

Gujarat, a major industrial state in India, has received recognition on a national and international level for providing a favorable business environment, which is backed by several Ease of Doing Business (EoDB) programs and cutting-edge infrastructural facilities.

 

Since Gujarat missed out on the IT bus in the 1980s and 2000, the government introduced a new policy that provides special incentives to promote hiring more local talents for IT and ITES. The IT/ITES Policy 2022-27 majorly provides both capital and operational support to IT firms making investments in Gujarat and promises to generate one lakh direct employment. To make Gujarat a “destination of choice,” the policy would primarily strengthen various components of the IT/ITeS ecosystem and offer assistance for co-working spaces.

 

The predicted result of the strategy is an eight-fold increase in IT exports from Rs 3,101 crore to Rs 25,000 crore. Now, Gujarat’s exports of IT make up roughly 1% of all exports.

 

The CAPEX support has been boosted under the new strategy from the previous Rs 1 crore to Rs 200 crore. A 25% CAPEX assistance up to a total of Rs 50 crore would be given for capital projects under Rs 250 crore. In addition, over the five-year policy period, the government has planned to offer 15% OPEX support, which will cost between Rs 20 and Rs 40 crore annually. As part of the policy, the IT firm will also be compensated with up to Rs 50,000 (for male employees) – Rs 60,000 (for female employees) or 50% of one month’s CTC if it hires and retains a new local employee.

 

Furthermore, IT/ITES units can claim reimbursement on their employer’s statutory contributions under the Employees’ Provident Fund, as they did in 2016-2021. Women will be reimbursed 100 percent of their EPF contributions, while men will receive 75 percent. Besides this, the government is also funding IT office space development in an IT city or township with CAPEX support worth Rs 100 crore.

 

Road Ahead

 

To sum up, the policy’s primary goal is to transform the state’s IT industry over the next five years. Building a strong cloud ecosystem, empowering start-up ecosystems in the state, and supporting research and development in cutting-edge technologies like artificial intelligence, the internet of things, machine learning, quantum computing, blockchain, and more will enable the development of a highly skilled, industry-ready IT talent workforce, cutting-edge IT infrastructure, cutting-edge incentive system, and more.

 

Even more variables, such as the growth in per capita income, industrial investment, continuous electricity supply, rising literacy rate, strong rail, and air connections, and the PM’s Digital India initiative, encourage Gujarat’s development as India’s next rapidly emerging IT/ITES hub.

 

As part of its sincere commitment to promoting talent in Gujarat, the state government is taking steps to help the IT sector develop by improving market access as well as developing skilled human resources.

 

Gujarat, therefore, has a tremendous amount of untapped potential that will eventually establish it as a major IT powerhouse in the nation.