Political Economy and Information Capitalism in India: by Govindan Parayil (eds.)

By Govindan Parayil (eds.)

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International competitiveness, as revealed by export profiles, suggests India’s continued dependence on low-wage, commodity-based exports. The significance of ICTs, however, should not be underestimated. As noted earlier, an important item in India’s export basket is software services. The share of IT and software in India’s GDP and exports has been rising. 82 per cent. 3 per cent (NASSCOM, 2002, 2004). This is evidence of limited structural change as more of the economy’s output is shifting towards IT, which is a composite subsector of manufacturing and services.

Alternatively, and complementary to the current export pattern, Indian firms will have to diversify their export markets. One market that needs to be examined is Japan, which currently draws little ICT services from India. Japan is increasingly confronted by demographic challenges such as an ageing population, declining fertility rates and increasing dependency ratio. In order to maintain their lead in the IT-related high technology industries, Japanese firms will be compelled to import foreign technical talent.

Measuring the efficiency gains from the application of such innovations is difficult. However, we know from some of the OECD economies that ICTs have a favourable impact on productivity growth (OECD, 2000b). We have also established that the Indian ICT sector is weak on hardware manufacturing. And the best performing segment of ICT, the software sector, is largely export-driven. Hence, in the absence of a dynamic ICT manufacturing sector and local demand, the software industry’s contribution to India’s knowledge-based assets will continue to be constrained.

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