Date:17/01/2006 URL: http://www.thehindubusinessline.com/2006/01/17/stories/2006011702411900.htm

Back CII predicts 40 pc growth in IT sector

Our Bureau

Hyderabad , Jan. 16

A SURVEY conducted by the Confederation of Indian Industry (CII) has pegged a 40 per cent growth rate in information technology sector during October 2005-March 2006.

The Business Outlook Survey conducted by CII's southern region for April-September 2005 also predicted a growth rate of 25 per cent for the manufacturing sector and 20 per cent for the textile sector in the second half of the current financial year.

It, however, pointed out that high power tariff, unreliable power supply, inadequate effluent facilities and difficulties in raising working capital were some of the bottlenecks for achieving the higher growth rates.

The survey, which covered Karnataka, Kerala, Pondicherry, Tamil Nadu and Andhra Pradesh, was conducted to analyse the performance of the top five sectors in each of these States during the first half (April - September) of the fiscal. The survey was also aimed at making predictions for the remaining period and identifying issues and concerns. It took the opinions of senior officials of leading companies in each of these five sectors.

In Andhra Pradesh, the survey was carried out in the IT, manufacturing, pharmaceuticals, textiles and agriculture sectors.

The survey found that the IT industry in the State had reported a 20-per cent growth in revenues and a 30-per cent growth in overseas billing in the fist half. It predicted that the second half could see a growth rate of 40 per cent in revenue due to higher IT spending across the globe.

The industry felt improvement in rural telecom infrastructure would allow the expansion and sustained growth of the sector.

The manufacturing sector posted a robust performance during the period. "Strong demand saw companies posting over 25 per cent growth in sales. The trend in profit margins was also positive," the survey said.

High power tariff, increase in customs duty and difficulty in raising working capital finance by SMEs were some of the concerns affecting the sector's competitiveness.

The textile sector recorded a 10-per cent growth in sales and exports. The industry was confident that it could achieve a growth rate of 16 to 20 per cent. To achieve this, the industry felt that cost of working capital and timely credit should be streamlined. It also called for improvement in road infrastructure and easing of procedural restrictions at ports.

The CII survey said the agriculture-based industry faced challenges in terms of lack of research and development support, high costs in obtaining certification and raising capital. The industry wanted the State to speed up implemention of the Contract Farming Policy and the Uniform Food Processing Act to give a further boost to the sector.

The pharmaceutical industry pointed out that inadequate effluent facilities, unreliable power supply, delays in price approvals for essential drugs were some of the roadblocks for high growth.