India will soon introduce a new national IT policy that will replace the decade-old National Policy on Information Technology. The new policy, with revised goals and benchmarks, is expected to be finalised by the end of the year. The government is currently working on the policy which will be released only after extensive consultations with industry stakeholders, including top IT companies and startups.
To develop the new IT policy, the government has already engaged with stakeholders across five major IT hubs – Bengaluru, Hyderabad, Chennai, Pune, and Bhubaneswar. Over 100 leading IT companies, including the top five IT services firms and numerous startups, have participated and provided their feedback. While the current focus is on the IT sector, there is a possibility that the policy’s scope could be expanded to include startups more broadly, although no final decision has been made. In fact, one of the key suggestions from stakeholders has been to broaden the policy’s focus beyond just IT services.
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What to expect from new national IT policy
A comprehensive IT policy is essential to guide India’s digital transformation. A well-designed policy can provide a framework for catalysing innovation, attracting investments, and addressing emerging challenges in the IT sector. It can also establish a conducive environment for businesses to thrive, stimulate economic growth, and ensure India’s competitiveness on the global stage.
The new IT policy seeks to enhance engineering research and development, boost employment generation, and strengthen global capability centres (GCCs). While GCCs were once primarily back offices for Fortune 500 companies, they have now evolved into tech powerhouses and strategic assets, providing access to digital talent at scale. Naturally, India wants to leverage this transformation. In addition, the new IT policy will focus on workforce skilling and promoting the development of IT products.
India’s technology industry reached a revenue of $250 billion in FY24, according to IT industry association Nasscom. However, this reflects a slower year-on-year growth rate of 3.8%, primarily due to global economic uncertainties. The policy will aim to support India’s journey toward becoming a global IT hub, continuing the targets set by the previous policy. The 2012 version sought to increase revenues from IT and IT-enabled services (IT-ITeS) to $300 billion by 2020, create 10 million additional jobs in the IT sector, and boost exports.
The new IT policy will set ambitious export targets for IT products and services, with a focus on achieving measurable goals within a three-to-five-year timeframe, given the dynamic nature of the industry.
In the past, the bulk of India’s IT exports were directed toward North America and Europe. The new policy is expected to build on the objectives of its predecessor. As major IT hubs such as Bengaluru, Chennai, Hyderabad, Mumbai, Pune, and the NCR account for nearly 90% of the industry and are highly saturated, the policy should aim to equip other states and cities to benefit from the global IT revolution. Diversifying into Tier II and Tier III cities is crucial for the growth of India’s IT and ITES sectors.
Among the key demands from the industry for the new policy is a stronger emphasis on the Indian market and a shorter review period than the previous 10-year cycle. A formal draft of the policy is expected to be presented to Union Minister for Electronics and IT, Ashwini Vaishnaw, by the end of October or early November.
The NPIT 2012 laid out a roadmap for India’s IT sector and articulated the government’s vision for its growth. As India continues its digital journey, the new IT policy must learn from the shortcomings of its predecessor and ensure the development of a secure and equitable digital ecosystem.