The information technology (IT) hardware industry in India is all set to grow from six to 18 per cent CAGR during the year 2014-18. This growth will push the GDP growth by Rs 66,300 crore; generate employment for 1,11,600 people and provide Rs 25,000 crore in taxes to the government. However, all these predictions rest, amongst other factors, on how well local production is increased in the country, according to a joint report by Manufacturing Association of India (MAIT) and KPMG on the unrealised potential of the IT industry.

The report was released in the capital on Wednesday. India’s IT hardware manufacturing industry is lagging behind its services and software counterparts by a huge margin. Policy deficit along with lack of investments have been seen as the reasons for its poor performance. India imports most of its IT hardware and the costs have been mounting, putting pressure on the economy.

Sam Pitroda, advisor to the prime minister on public information infrastructure and innovations, speaking at the release, said that currently the cost of IT hardware import is around $ 70 billion, which is going to become $ 300 billion in the coming years. At the dismal scenario in India, Pitroda said, “In the last five years, there have been much talks about increasing local production knowing well that we do not have much to talk about.” He said that setting up IT manufacturing industry in India is not ‘rocket science’ and the government should learn from countries like China and Brazil.

“The first semi-conductor plant burnt down some years back, after which there has been very little national initiative in this direction,” he said. J Satyanarayana, secretary, department of electronics and information technology (DEITY), said that high demand for IT products would also push India to go for local manufacturing. “A high demand will depend on the affordability of products which is possible when products are locally produced in the country,” he said.

According to Satyanarayana, to realise the predictions of the report, many other measures have been taken for IT penetration in India. “The only way demand will go up is by creating value for the product the way it happened for the mobile phone,” he said.

Satyanarayana said that content needs to drive the demand. The other factors are affordability, connectivity and e-governance services, which are shooting up the demand for IT products. “The current rate of e-governance services is 10 crore transactions per month which is approximately one crore citizens touched by these services. We see a future of 100 crore transactions per month touching three crore citizens,” he said.