Smaller units to benefit from e-governance

Centre proposes to earmark 10% of IT-enabled projects for SMEs

In a bid to provide a level playing field to small and medium enterprises (SMEs), the Union Ministry of Information Technology is evaluating a proposal to reserve 10 per cent of IT-enabled projects for SMEs across the country.

The ministry recently circulated the proposal to state governments, seeking recommendations from various stakeholders, including industry.

According to K Ratna Prabha, secretary to the information and communication technology department of the government of Andhra Pradesh, the Central government’s efforts will benefit small companies. SMEs will stand to get the orders directly. In case big companies get projects, there will be provisions to outsource at least 10 per cent of the orders to SMEs.

“We are studying the proposal in order to make recommendations,” she said.

The IT and IT-enabled Service Industry Association of Andhra Pradesh (ITsAP), too, has made a similar suggestion to the state government while giving feedback on the recently announced IT Policy for 2010-15.

“Usually, SMEs are good at executing projects. But because of their size, they are disqualified from participating in large projects. Earmarking about 10 per cent of e-governance tenders for SMEs will ensure that companies will have a level playing field,” said L Suresh, president of ITsAP.

Of the 1,200-odd IT and IT-enabled Service (ITeS) companies, more than 70-75 per cent are in the SME category, earning annual revenues of less than Rs 100 crore.

The focus of the new IT Policy for 2010-15, too, is on start-up companies, SMEs, IT products and women entrepreneurs. It has also listed promotion of women’s participation in the ICT sector as one of its objectives. It envisages more e-governance projects, particularly in local languages, the secretary said.

The Andhra Pradesh government, with support from the IT Exporters Association, ITsAP, NASSCOM, Software Technology Parks of India and the Institute of Electronic Governance will create a library that will make trends in technology, market intelligence, research reports and analysis available to SMEs. The government will contribute about Rs 10 lakh a year for development of the SME sector by making such material available at these libraries.

A company with up to 50 employees, which has been in existence for less than five years, and with turnover ranging from Rs 50 lakh to Rs 10 crore is considered a start-up. However, there is no provision so far to provide financial assistance to start-ups, she said.

The government has now decided to reimburse 25 per cent of the rental expenses for premises leased by SMEs in STPIs and IT/multipurpose SEZs/IT parks, both in public and private promoted parks. It also extends a 25 per cent power subsidy to these start-ups as incentives. The government, among other things has also decided to provide recruitment assistance Rs 2.5 lakh for every 50 persons recruited for three years.

The state government is also in the process of tying up with business analyst firms to evaluate the strengths of SMEs, so that SMEs can market themselves in international markets. It will also facilitate linkages of smaller ICT companies with bigger firms.

The IT sector in the state, which is ranked fourth in IT performance in the country, provided employment to 2.51 lakh in 2009. The share of IT exports from Andhra Pradesh is about 15 per cent of national IT exports. The IT sector contributes about 50 per cent of the total exports from all sectors in the state.

The state has now targeted an export value of Rs 70,000 crore by 2015 (the current figure is Rs 32,000 crore), growing at a projected 17 per cent. Andhra is aiming to generate new employment for 125,000 people and indirect employment for 500,000 .