DEPARTMENT OF INDUSTRIES AND COMMERCE,
GOVERNMENT OF TELANGANA
companies present in the state
in the state
Amarnath Reddy A
Chief Relations Officer,
Industry outlook, Opportunity in Telangana
India spends about USD 1.6 Bn on skilling IT/ITeS workforce. Indian IT industry has more than 17,000 firms, of which over 1,000 are large firms with over 50 delivery locations in India. The country’s cost competitiveness in providing IT services, which is approximately 3-4 times more cost-effective than the US, continues to be its unique selling proposition in the global sourcing market. In the area of global services outsourcing, India caters to the highest market share in the world (55%) of the USD 185-190 billion business as of FY19. India’s IT industry contributed around 7.7 percent to the country’s GDP and is expected to contribute 10 percent to India’s GDP by 2025. As of FY19, IT industry employed 4.1 million people.Digital India campaign A $ 20 bn Investment covering mobile connectivity across India is also driving this growth.
SEGMENTS OF INDIA’S IT SECTOR
- Market Size: US $92.49 Billion for the year 2019.
- Over 81 % of revenue comes from the export market.
- BFSI continues to be the major vertical for the IT sector.
- IT services accounted for almost 51 percent share of IT industry’s revenue in Indian for the year 2019.
Business Process Management :
- Market size: US $36.2 billion for the year 2019.
- Around 87 percent of revenue comes from the export market.
- Market size of BPM industry to reach US $54 billion by 2025.
- BPM had a 20 percent share of IT industry’s revenue in Indian for the year 2019.
Software Products and Engineering Services:
- Market size: US $34.39 billion for the year 2019.
- Over 83.9 percent of revenue comes from export. It had around 19 percent revenue share in the Indian IT space for the year 2019.
Information technology is one of the fastest growing sectors in Telangana.Hyderbad,Telangana’s contribution Information Technology (IT) and Information Technology Enabled Services (ITES) sector played a vital role in putting India on the global map. Telangana Government is aggressively setting up Export Oriented Units (EOU), Software Technology Parks (STP), and Special Economic Zones (SEZ) to further this cause and facilitate more IT and ITeS investments in to India. The central government recently announced formation of an Information Technology Investment Region (ITIR) near Hyderabad. With the establishment of the ITIR, the government plans to generate 1.5 million direct and 5.3 million indirect jobs in the IT sector in the next five years.
- There are 1500 IT/ITeS companies that employ over 5.8 lakh professionals, besides providing indirect employment to over 7 lakh people.
- Telangana’s IT/ITeS Exports grew at 17.93% compared to the National Average of 8.09% and the rest of the Nation’s Average of 6.92%.
- Telangana’s exports in India went up from 10.6% to 11.6% and the share of Telangana in this year’s growth in National Exports is a remarkable 23.5%.
COVID related initiatives
- To handle the unprecedented COVID crisis, the ITE&C worked with I&C department in rising up to this unprecedented occasion promptly and took several key measures – on facilitating citizen contact tracing, movement, home quarantine, volunteering etc. on creating policies for industry operations as well as facilitating passes for the same and ensure business continuity via digital solutions to all key industry partners of Telangana.
- T-SAT has begun broadcasting multiple hours of online classes daily tailored to various government academic institutions that have gotten effected by COVID.
- Digital Media team has prepared COVID fact check portal and a multi-lingual COVID WhatsApp chatbot.
- The Government of Telangana has partnered with WhatsApp to establish a dedicated Coronavirus helpline for citizens to receive accurate information on the pandemic. We are doing everything we can to keep our citizens safe in these challenging times and urge everyone to stay indoors and ensure they rely only on verified channels of information.
Telangana Government launched its official WhatsApp Chatbot
COVERAGE UNDER TS-IPASS
The Industries department of the government has recently brought out a new scheme, the Telangana State Industrial Project Approval and Self Certification System (TS-iPASS), which provides for automatic approvals based on self-certification. All approvals required by mega industrial projects will be given in 15 days, and for all other types of industrial projects, the approvals will be given in 30 days. Further, a right has been bestowed to the investor in that, if the agencies fail to provide the approvals within 15/30 days, the approval would be deemed to have been accorded, and the agency which caused the delay will be penalized. All approvals pertaining to IT companies will also be covered by the TS-iPASS.
ALLOTMENT OF GOVERNMENT LAND AND PROVISION OF INCENTIVES
Given the fact that the Information Technology sector creates massive employment and also contributes to the state’s economy in a very significant way, the Government also needs to encourage IT companies coming to
the state by providing suitable incentives. Incentives will be offered in the following ways:
- Land cost rebate linked to employment.
- Power cost reimbursement.
- Reimbursement of stamp duty, transfer duty and Registration Fees.
- Reimbursement of patent filing/copyright costs and Quality Certifications costs
- Recruitment Assistance incentives
The land allotment process that is followed by Telangana State Industrial Infrastructure Corporation (TSIIC) for industrial units is also followed for land allotment to IT companies. The IT companies requesting for land and applying for incentives will be scrutinized by the Consultative Committee on Information Technology Industry (CCITI) and the recommendations will be passed to TSIIC. For Mega IT projects and marquee IT companies, a decision which will be taken in the CCITI for provision of a tailor-made package of incentives.
PROMOTING THE CREATION OF INTELLECTUAL PROPERTY
In order to thrive and expand, an ecosystem also needs strong Intellectual Property laws and frameworks apart from physical infrastructure. The Government wants to enforce intellectual property laws by creating an IP cell with dedicated resources to investigate and prosecute intellectual theft. The Government shall also strive to expand cooperation with various international agencies to gain expertise on IP laws across multiple countries, encourage and incentivize IPR registration in India, not only for small and mid-sized companies but also for start-ups and entrepreneurs.
The Government wants to develop a responsive mechanism which will be tuned into the critical needs and emerging requirements of IT companies. While the ITE&C department itself can resolve most such issues and grievances, certain issues will require to be coordinated with other line departments like Telangana State Industrial Infrastructure Corporation (TSIIC), Greater Hyderabad Municipal Corporation (GHMC), Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB), Hyderabad Metropolitan Development Authority (HMDA), Transmission Corporation of Telangana (TRANSCO) etc. Government will create an empowered committee comprising senior officers from these departments which will meet periodically and interact with industry bodies such as National Association of Software and Services Companies (NASSCOM), Hyderabad Software Enterprises Association (HYSEA), Telangana Information Technology Association (TITA) and other industry associations, in order to create multiple channels for soliciting feedback from the IT industry.
SPECIAL FOCUS ON PROMOTION OF IT/ITeS SMES
While large companies typically have globally recognized products/services and provide employment to thousands, the contribution of hundreds of SMEs working in the IT sector is no less significant. It is estimated that there are over 500 IT companies in the SME category who collectively employ over 70% of the working IT population. A major part of the state’s IT revenues comes from SMEs and the government aims to give a further boost to this sector by crafting two initiatives specifically for them.
Construction of SME Towers
Given their scale the SMEs do not have the where with all to develop their own campuses or buy a built-up space for their use. Most of them presently lease existing buildings to run their operations. A major support that will be given to such IT SMEs by the Government will be to offer lease rental subsidy. The Government also intends to construct IT towers in Gachibowli/ Madhapur/ Nanakramguda exclusively for SMEs having small office spaces which the SMEs can use as their front office for client interactions and brand building purposes. The IT towers will also have facilities like common conference centers, availability of WiFi, cafeteria and other basic facilities on par with leading commercial IT office hubs.
Creation of Specialized Financial Instruments
One of the key factors that stops SMEs to grow bigger is the ready access to capital. Realizing this, the government is trying to ease this bottleneck and give SMEs the financial assistance that will help them grow sustainably. The Government shall first engage with national and international investment banks, financial institutions and Private Equity funds to understand the synergies between existing SME scenario and the finance providers. Later, in collaboration with these bodies, the government shall carve out a specialized financial instrument that will adopt best practices from various countries to eventually help this sector thrive. The instrument shall directly promote SMEs by providing them easy access to affordable financing structures.
Value Proposition of Investing in Tier II and/or Rural Areas
The government of Telangana was founded on very principle of inclusive excellence. To that end it has always considered technology to be a key enabler for these areas.It has keenly noted the global trend of workforces preferring the quality of living offered by less congested tier-2 towns over metros and the fact that many conglomerates are exploring the same because of economic and personnel reasons. Various reports from NASSCOM, Mercer, IBEF, NITI Aayog also affirm this. The state then decided to create a win-win situation and has targetted IT/ITeS investments into Rural areas as well Tier-2 Cities in Telangana by providing various incentives.
- High potential for infrastructure growth due to smart cities project and JNNURM.
- Easier of incorporation and banking services
- Ease of access to local authorities
- First-mover advantages
- Cheaper cost of real estate of larger size
- Cheaper Manpower
- Higher Employee retention
- Lower cost of other operational expenditure
- Higher quality of living
- Proximity to families
- Lesser traffic
- Lower cost of living – rent, food, education etc.
Definition: Tier II locations: Any city/town outside HMDA city limits in Telangana is classified as a Tier II city.
GoTS is also continuously investing on developing infrastructure in Tier-2 cities. Primarily, Telangana has decided to focus on 5 districts to serve as the grounds of this initiative. Namely – Khammam, Karimnagar, Mahabubnagar, Nizamabad and Warangal.
The Government wishes to encourage IT/ITES companies to also consider Tier II locations like Warangal, Karimnagar, Nizamabad etc. Due to the availability of cheaper land (as compared to Hyderabad) and infrastructure, and the presence of a number of professional colleges including engineering colleges at these centers, these centers could potentially emerge as attractive destinations for IT/ITES company planning to setup a new center. The Government will further incentivize these companies by providing benefits. The first few pioneering anchor clients for each of the Tier II location will get additional benefit.
Telangana and ITE&C’s vision to take IT to tier-2 cities has borne fruit with the help of investments from Tech Mahindra and CYIENT, both having chosen to open their centres in the Warangal.
The office of Cyient in Warangal, currently employs 200 engineers and is planning to hire 600 more locally sourced workers in a phased manner, while Tech Mahindra is likely to provide employment to nearly 1,000 people.
T Works designs an affordable BVM-based ventilator
I'm thrilled to see what Minister KT Rama Rao has been doing to promote technology in Telangana and push an entrepreneurial and innovation-friendly agenda. We’re excited to partner with state agencies to bring technologies like Adobe Sign to market and improve the way organizations conduct business and work more efficiently. We recently announced plans to set up advanced Artificial Intelligence lab in Hyderabad.
We are honoured to be here for lifelong friendship with Telangana. The talent here in the local area is incredible and we are looking forward to expanding our relationships and introducing more universities and partners to our platforms as we scale our operations.
Telangana has been home to our IT operations since 2005-06 and our presence in the state has grown multifold since then. With a pool of quality talent, state-of-the-art infrastructure and a progressive government, the state was a natural choice for us to set up our largest campus in India here.
Amazon has a long-standing association with Telangana from 2004, when its operations in India commenced in Hyderabad. Fifteen years later, the state is home to a third of our Indian employee base across six offices including Amazon's largest building in the world, inaugurated in Hyderabad, in 2019. We are grateful for unwavering support from the Government of Telangana that has made it possible for us to Think Big and participate in the vibrant business ecosystem in the state.
OTHER ENABLING FACTORS
Multiple initiatives have been undertaken to promote create a digital environment across the state.
Wi-fi City – Project Hy-fi
Government has partnered with various ISP’s to install 3000 hotspots across the city – The Highest in the country
T-Fiber aims to connect every household, government institution and private enterprise across the rural part of the state through optical fiber connectivity.
Similar set-up is being planned in other cities and municipalities in TS
Connectivity to 47+ lakh households and 1+ lakh public &private enterprises across 10 Zones (31 Districts), 584 Mandals (Block), 8778 Gram Panchayats and 10,128 Villages.
Likewise, numerous other policies have been formulated to incentives various Tech related sectors.
INCENTIVES FOR EXPANSION OF IT / ITES IN TELANGANA
For Mega project investment or for a project of a strategic importance Telangana Government provides tailor made incentives and observes a strict “Meet or Beat” policy by matching or providing better incentives offered by any State Government within the Country.
Highlights of ICT Incentives:
- Reimbursement of Registration Fee, Stamp Duty and Transfer of Property Duty.
- Industrial Category Power Tariff
Reimbursement of Retrofitting Costs of Energy Efficient Equipment.
- Lease / Rental Subsidy
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