IT spread still to gather pace

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By Staff Reporter
  • Published 11.11.13

Calcutta, Nov. 10: High cost of ownership and the lack of customisation of products in local languages are some of the major challenges to increasing penetration of IT in the country, a report has said.

According to a joint study by the Manufacturers’ Association for Information Technology (MAIT) and research firm KPMG, a lack of awareness among the micro, small and medium enterprises of existing government schemes has also prevented them from enjoying the benefits of IT.

“There is no denying that India has a huge potential for the growth of the IT hardware industry. We need the right approach to enhance IT penetration, which will significantly contribute to economic growth,” said MAIT president Amar Babu.

“The report has identified some of the bottlenecks which are hampering PC penetration in the country and has proposed the most viable recommendations to overcome them,” he said.

Despite sales of personal computers rising in the last few years, its household penetration in India is still one of the lowest globally at 10 per cent compared with Sri Lanka’ s 12 per cent.

In Vietnam household penetration stands at 16 per cent, China, 35 per cent, Brazil, 45 per cent, and Malaysia, about 64 per cent.

To increase affordability of PCs, the report suggests that the government take some steps such as reducing excise duty rates to 6 per cent from 12 per cent, providing income tax exemption to individuals buying PCs and promoting purchases among specific segments such as students and households with an annual income of less than Rs 5 lakh.

For MSMEs, awareness campaigns promoting the IT spend component in the existing credit-linked capital subsidy scheme has been suggested.

The industry could also look at developing keyboards with scripts in Indian languages for use in smallers towns and rural areas.

The report estimates a rise in the sale of desktops and notebooks at a compounded annual growth rate (CAGR) of 18 per cent from 6 per cent between 2014 and 2018. This will contribute an additional Rs 66,300 crore to GDP (gross domestic product) and Rs 25,000 crore to taxes. Tablets are expected to beat desktop and notebook sales by 2015. Their sales are growing at a CAGR of 73 per cent to 51 million from 1.9 million units by the end of fiscal 2018.