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Forecast halved for Indian software exports growth

Market intelligence firm International Data Corp said on Tuesday it had lowered its projections for Indian software export growth in 2001-02 to 20-25 per cent from 50 per cent.

The forecast is sharply lower than one made by India's software industry body, the National Association of Software and Service Companies, which recently scaled down its projections of software export growth to 40-45 per cent this year from 52 per cent.

"The growth of software exports from India would definitely be affected, though the effect is going to be of a temporary nature," IDC analyst Ravi Sanghal said in a report on the US slowdown and its impact on the Indian economy.

The situation should start improving from 2002 onwards, he said.

The synopsis of the report, obtained by Reuters on Tuesday, did not elaborate on the sharply reduced growth estimate.

Many Indian software providers led by Infosys Technologies said at the time of reporting results for the latest January-March quarter that they were feeling the impact of the US slowdown.

Infosys expects its revenue to grow by 30 per cent this financial year compared to an average of 90 per cent in each of the past four years.

Wipro, India's largest software company by market capitalisation, however said it expects to grow better than the industry average.

Its chairman Azim Premji said in an interview in London on Monday that the current quarter was a little better than the previous one.

No major impact on Indian economy

IDC said the US slowdown was unlikely to affect either overall exports from India or US investments in the country in a significant way.

"India's exports as a percentage of GDP are less than 10 per cent. And if we add that only about one fourth of our exports is to the United States, we are really saying that the US slowdown will not affect our total exports very significantly," it said.

IDC said foreign investment in India was rather small compared to the size of the economy and other factors like attractiveness of investment, infrastructure and bureaucracy also affected the pace of investment.

IDC said India's economy depended a lot more on internal factors like industrial growth which, at a low of 0.6 per cent year on year in February, was a cause for concern.

But IDC said it expected the industrial growth rate to start improving from the October-December 2001 quarter.

"Overall we expect the industrial growth rate index during 2001-02 to be similar to 2000-01, but improve substantially in the following year," it said.

IDC also said it expected India's GDP to grow at 6.0-6.2 per cent in 2001-02 if the monsoons were normal and the stock market did not fall further.

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