Wednesday, July 11, 2007

Bits & bytes
Govt warned against ‘excessive focus’ on IT

The government should not put “excessive focus” on the IT and IT-enabled services (IteS) sector while ignoring other key sectors which have more potential to generate growth and employment, said the Associated Chambers of Commerce and Industry of India (Assocham).

Policy-makers should focus more on sectors such as manufacturing, agriculture, services and allied sectors which contribute 17 per cent to the country’s gross domestic product (GDP) than the IT sector, which contributes 5 per cent, according to the Assocham.

“Now the time has come when policy-makers’ attention should be drawn towards sectors that contribute 70 per cent of government revenues and provide huge employment opportunities on a sustained basis than drive and accelerate IT and ITeS,” Assocham president Venugopal N. Dhoot said in a statement in New Delhi.

“India needs to understand the importance of the balance of 95 percent of the economic activity, which hover around manufacturing, wholesale and retail, tourism and travel, healthcare, education, construction and retail business worldwide,” Dhoot added.

The chamber also suggested encouraging the growth of the small and medium enterprises (SMEs) to boost the manufacturing sector, giving successful examples from the US, Japan, Taiwan, Europe, South East Asia and Brazil.

The sectors that will have tremendous growth potential to accelerate manufacturing and, therefore, create ample jobs include machine tools, auto components, pharmaceuticals and engineering besides textiles.

Policies should be formulated in a way so as to attract maximum amount of investments and modern technology in sectors such as textiles, engineering, auto components and machine tools.

Effective steps should also be taken to leverage the amount of foreign capital inflows in the country.

The global trend of sourcing products from low-cost countries like India will gather strength over the next 10 years, particularly in skilled intensive industries in which countries like India will have significantly competitive advantages.

The industry body also stressed the need for a multi-pronged strategy that would aim at making manufacturing competitiveness the main focus area of the government.

It also suggested the government to formulate a policy package for the industries with high-export potential. There should be easy exit for the loss-making companies and growth of the retail industry and real estate should be encouraged, it said. —IANS