History of Indian IT industry

We will be looking at the IT industry from 1991 post-liberalization to till date and the factors contributing for the significant growth. India did not see a development in IT industry during mid 70’s and this period was not so effective due to restricting imports of computer peripherals, high import tax, strict Foreign Exchange and Regulation Act limiting its allocation.

A notable turning point in the Indian software and IT industries policy environment was when Shri Rajiv Gandhi became PM in 1984. The major policy reforms were to recognize software as an industry to invest and make it eligible for incentives as other domestic industries, reducing import tariffs and announcement of CSDT policy which liberalizes exposure to the latest technologies to compete globally and to capture a share of global software exports.

In 1986 when all state-owned banks were standardizing banking process, there came a need of using UNIX over MS-DOS and which created a puzzle for local vendors to shift towards UNIX based platforms and made India become “Unix country”.

Another important event in mid 80’s was when GE’s chairman Jack Welch visited India in 1989 which led to GE’s technology partnership with India. Till this period policies were able to remove the barriers in IT industry but not completely.

In 1990, Department of Electronics (DoE) introduced the concept of Software Technology Park (STP’s) in India. STP’s were allowed with basic infrastructure, dependable power supply, tax exemptions and also given 100% ownership for the foreign firms. 1990’s development was mainly because of STP’s. MRTP Act was replaced de-facto in 1991 which allowed unbiased trade practices there after.

During this period India saw dramatic changes in heavy investments on higher education and booming privately funding engineering colleges which made India ready with technical manpower resources.

South Indian states saw drastic changes in higher education after 1983, where liberalization made a major impact on privately funded colleges. This created IT clusters to form in and around Bangalore, Hyderabad, Chennai, New Delhi, Mumbai and Calcutta.

A significant break through factor in IT industry development was by Y2K. Indians were already gained expertise in converting mainframes and DOS PC’s into UNIX platform. Y2K created a battle ground for Indian software professionals and which prepared them to compete and show their talent globally.

High investments in higher education and formation of prestigious engineering colleges, policy reforms to allow foreign investments in 1991 enabled for significant growth in development. From just programming and documentation work India emerged to implementation, R&D, out sourcing and diversified itself to hidden depths of IT industry to become a global hub for software and IT enabled services.