ESC to set up two incubation centres in US for infotech SMEs

As a part of its endeavour to promote the IT SMEs (small and medium enterprises) in the country, the Electronics and Computer Software Export Promotion Council (ESC) of the Government of India plans to set up two incubation centres for these units in USA in this fiscal.

These centres would provide export facilitation and business support for the IT SMEs which do not compete against one another.

DK Sareen, executive director, ESC said, “We are planning to set up two export facilitation and business support centres for the country’s small and mid-sized IT firms in the west coast of USA in this fiscal.”

The move to set up business support centres for the IT SMEs is aimed at enabling these units to gain market access in select regions of the US market.

The export facilitation cum business support centres are being set up under the Market Access Initiative (MAI) Programme of the Union ministry of commerce.

Under the MAI programme, 50 per cent subsidy would be provided to the mid-sized IT firms for setting up office space and engaging a senior marketing executive in US while the balance 50 per cent of the cost has to be borne by the units.

ESC has already set up two such centres in US- the Rockville centre in Montgomery county near Washington and the other centre in Fairfax in the Virginia province.

While the Rockville centre was started in July 14 last year, the Fairfax centre was launched on June 8 this year.

“Five small to mid-sized IT firms have office space in each of these centres. Each of these firms has a pool of 50-100 professionals and these units transact business ranging from $1-5 million per annum”, said Sareen.

He was speaking at a seminar on ICT (information and communications technology) export initiatives and currency futures. The seminar was jointly organised by the Orissa Computer Application Centre (OCAC), Software Technology Parks of India (STPI) and ESC.

Talking on electronic hardware and software exports, Sareen said, “The export of electronics hardware as well as computer software and services stood at around $54 billion in 2008-09, accounting for 16 per cent of the country’s total exports. However, there is a huge mismatch in terms of software exports as 20-30 large firms account for more than 70 per cent of the exports.”

He pointed out that out of the 5,000 odd IT firms in the country, more than 4,700 firms are in the SME segment and these firms lack the resources and in-depth knowledge to access global markets.

Over 2,300 software firms are members of ESC which includes only three from Orissa. Sareen called for the formation of a state level committee of ESC in Orissa to enable more IT firms in the state to join the council.

Pradipta K Mohapatra, the Orissa IT secretary said, the IT firms in the state need to come forward to form the state level committee of ESC.

The IT exports from Orissa have crossed Rs 1,000 crore in 2008-09 despite the challenges faced by the software exporters due to the economic downturn and the currency fluctuations, he added.

Speaking on the occasion, Sandeep Dandapat, branch in-charge (Kolkata) of National Stock Exchange (NSE) said, the last three years have witnessed extreme volatility in currency transactions involving the US dollar and the Indian rupee and this in turn has affected the profit margins of the IT companies.