Information technology (IT) is amongst the fastest growing sectors in the country. Its contribution to GDP rose from 1.2 per cent in 1999-2000 to 5.2 per cent in 2006-07 and to an estimated 5.5 per cent in 2007-08. Growth of Indian IT industry has been driven by the IT software and services (IT services) and IT enabled services (ITES). The software and services (IT services) industry of India has been moving up the value chain, giving India a formidable brand equity in the global markets. The Indian software and services exports including ITES-BPO are estimated at US$ 40.3 billion (Rs. 163,000 crore) in 2007-08 as compared to US$ 31.4 billion (Rs. 141,000 crore) in 2006-07, showing an increase of 28.3 per cent in dollar terms and 15.6 per cent in rupee terms.

Business Process Outsourcing (ITES-BPO) sector has emerged as a key driver of growth for the Indian software and services industry. It has become the biggest employment generator amongst young college graduates. The total number of IT and ITES-BPO professionals employed in India have grown from 284,000 in 1999-2000 to over 1.63 million in 2006-07. In addition, the industry helps to create millions of job opportunities through direct and induced employment in telecom, power, construction, facility management, IT, transportation, catering and other services.

Indian companies are expanding their service offerings, enabling customers to deepen their offshore engagements and shifting from low-end business processes to higher ones. They are also enhancing their global service delivery capabilities through a combination of greenfield initiatives, cross-border mergers and acquisitions, as well as partnerships and alliances with local players. This has helped them execute end-to-end delivery of new services.

Also, a majority of companies have already aligned their internal processes and practices to international standards such as International Organization for Standardization (ISO); Capability Maturity Model (CMM); and Six Sigma. This has helped establish India as a credible sourcing destination. As of December 2007, over 498 India based centres (both Indian firms as well as MNC owned captives) have acquired quality certifications with 85 companies certified at Software Engineering Institute (SEI), Carnegie Mellon Capability Maturity Model (CMM) Level 5 (higher than any other country in the world).

Department of Electronics and Information Technology (DIT) is the nodal organisation in the country, responsible for formulation, implementation and review of national policies in the field of information technology. All policy matters relating to silicon facility; internet; computer based information technology and processing including hardware and software; standardization of procedures and matters relating to international bodies; promotion of knowledge based enterprises; e-commerce; information technology education; etc are addressed by it.

The department has been making continuous efforts towards making India a front-runner in the age of information revolution. Some of the major initiatives undertaken by it include:-

• A 'National Taskforce on Information Technology and Software Development' was formed with the objective of framing a long term 'National IT policy' for the country and also for removing the impediments to growth of the infotech industry. The taskforce suggested various measures towards building India's IT industry and proliferating the use of IT in the country. It submitted its recommendations in the form of three key reports to the Government.
  
  
• Enactment of the Information Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions; prevent computer crimes; promote electronic filing or documentation and digital signature. It aims to create an enabling environment for e-Governance and to boost e-Commerce in the country.
  
  
• Community Information Centres (CICs) have been set up in the seven North East States and Sikkim for socio economic development of the region. These CICs provide internet connectivity, e-mail facilities, interface between citizens and government, distance learning programs, information on national programmes, disaster management system, public health awareness, etc to the public.
  
  
• E-Governance is one of the areas in which Information and Communication Technology (ICT) is having a profound impact on the way governments function and the manner in which government services are made available to the citizens. The e-governance projects are expected to increase efficiency, enhance effectiveness and improve quality of the government services. Hence, National e- Governance Plan (NeGP) has been announced with the vision of making all government services accessible to the common man in his or her locality, through common service delivery outlets and ensure efficiency, transparency and reliability of such services at affordable costs. Besides, various IT activities such as development of software applications packages, creation of e-governance infrastructure, National ID, citizen databases, smart card, etc are being taken up on pilot scale basis.
  
  
• State Wide Area Network (SWAN) is a scheme for establishing state wide area networks across the country in 29 States and 6 Union Territories over a period of five years. The scheme envisages to provide central assistance to States and Union Territories (UTs) for establishing SWANs from State and UTs headquarters upto the block level with a minimum bandwidth capacity of 2 Mbps.
  
  
• State Data Centres have been identified as one of the important elements of the core infrastructure for supporting e-Governance initiatives under NeGP. It is proposed to create data repositories or data centres in various States so that common secured data storage could be maintained to serve host of e-Governance applications.
  
  
• Common Service Centres (CSCs) are one of the three infrastructure pillars of NeGP and are deemed to serve as the physical front end for delivering government and private services at the doorstep of a citizen. The government has approved a scheme for facilitating establishment of 100,000 broadband internet enabled CSCs in rural areas of the country, to be implemented in public private partnership.
  
  
• Unique ID for BPL families is a project launched with the objective of creating a core database of all residents of the country and assign a unique ID number to all such residents over 18 years, in order to facilitate better targeting of government social welfare schemes and poverty alleviation initiatives.
  
  
• e-District projects have been launched with the objective of computerising the backend workflows at the district level with appropriate business process reengineering (BPR); reduce the work load at the district level; ensure fast processing of cases or grievances; and enable better monitoring of various government schemes. It aims at bringing a number of services online, in a web-based mode, including applications under the Right to Information Act; applications for house sites, ration cards, transfers of teachers, inclusion in the electoral roll, filing of police complaint, issue of birth/death certificates and copies of land records. Most of these services are provided at the district level and they serve as the primary interface between the government and the citizens.
  
  
• National Informatics Centre (NIC) has been instrumental in steering Information and Communication Technology (ICT) applications in Government departments at Central, State and District levels. It is facilitating improvement in government services; wider transparency in its functions; and improvement in decentralised planning and management. Some of the major projects undertaken by it include budget computerisation; central excise computerisation; commercial tax computerisation; courts computerisation project for supreme court, high courts and district courts; agricultural census and marketing; parliamentary elections data transmission and analysis; land records computerisation; and utility mapping project; etc.

Further, in order to ensure that the benefits of IT reach the common man, Government has initiated a move to make available tools and fonts in various Indian languages freely to the general public. Software tools and fonts for 10 Indian languages namely Hindi, Tamil, Telugu, Assamese, Kannada, Malayalam, Marathi, Oriya, Punjabi and Urdu languages have already been released.

India has the potential to develop and manufacture Electronics/IT Hardware for the global markets. But, the industry faces limitations on account of certain factors like high incidence of taxes; inadequate infrastructure; high cost of finance; transaction cost; freight and power; low volumes of production and inverted customs duty structure in some products; etc. The Government has identified growth of Electronics and IT Hardware manufacturing sector as a thrust area and has been providing a package of incentives for the Electronics/IT Hardware manufacturing sector with the objective of:- (i) making the industry globally competitive; (ii) attracting more FDI into it; (iii) bringing down the prices of the end products as well as the production costs; (v) increasing volumes to take advantage of efficiencies of scale; (vi) increasing the demand; etc.

As a result of all such efforts, India is placed among the fastest growing IT markets in the Asia-Pacific region. Global software giants such as Microsoft, Oracle and SAP have established their captive development centres in here. Today, India is a preferred destination for ITES due to its distinct advantages, which lay in its supportive government policies; infrastructural facilities; low manpower cost; growing knowledge pool; specialised technical skills; higher productivity and quality of service; etc. This increasing attractiveness as an investment destination in IT has even led to a reversal of the brain drain i.e. the people of Indian origin who went to pursue careers abroad are now attracted to work in India itself.