Indian Services Sector Helped South Asia Buck Slump: IFC

Washington, September 16: | Updated: Sep 17 2003, 05:30am hrs
Led by the Indian services sector, private enterprises helped South Asia buck the global economic downturn and maintain annual growth at around 5 per cent, the International Finance Corporation (IFC) has aid.

The services sector in India was at the forefront of the growing global market in services and attracted a good chunk of the fast-growing outsourcing business, the IFC annual report, released by its executive vice-president Peter Woicke here on Monday, said. IFC is the private sector lending arm of the World Bank group.

The Indian software industry, the report said, experienced tremendous growth, exceeding $12 billion in revenues last year. Software exports increased 30 per cent during fiscal 2002 to reach $10 billion, despite the downturn in the global IT market, says the report.

Woicke said during fiscal 2003, IFC has committed $350 million as investments to manufacturers seeking to achieve international competitiveness.

Indian companies among these included Tata Motors, Apollo Tyres, Alok Industries, Usha Beltron, Cosmo Films, and Larsen & Toubro. These companies are bringing new technologies to the South Asian market that are both more cost-effective and more environmental-friendly, the report said, adding however, to remain competitive globally, the Indian IT industry would have to move into higher value-added products and services.

An important step in this regard is being taken by venture capital fund New Path Ventures which is launching several new companies in the field of semiconductor chip design and embedded software, the report said. The fund will use Indias high skill base and lower cost structure to compete with more established international chip design companies.

The corporation invested $10 million in equity and quasi-equity of selected subsidiary companies. Unlike a traditional venture capital fund, New Path Ventures would pursue new business opportunities by drawing on the extensive background of its sponsors - NRIs-based in Silicon Valley. These professionals, IFC said, had a world class track record in the semiconductor design industry and boasted the combination of high-level experience, skills and relationships needed to make entry into this market a success.

Woicke also said IFCs capacity-building products in India included one in West Bengal and another in the North-East region, where help would be given to smaller entrepreneurs to get access to financing, to market themselves better, etc.

Two short films, both featuring India, were shown as a prelude to the press conference in which the report was released. One of the films showed the all-weather Hole in the Wall computer which can be left in the open, where boys and girls in an Indian school with no previous computer training learn to use it by themselves. The other was on outsourcing of medical records, backed by IFC, sent from the US to India which are returned in proper form the same day. (PTI)