Innovation and Development in Information Technology in India: Specific to Software Industry

Information technology (IT) plays an important role in development of business, boosting economic growth and employment by energising higher education sector. Software sector is a major component of IT industry. Development of indigenous software products is necessary for nation’s economy through development in software industry. Under ‘Digital India’ and ‘Make In India’ programmes major institutions are involved in policies and initiative programmes, R&D and innovation for growth of software industry. The paper attempts to highlight the crucial contribution of key stakeholders such as universities, technical research institute and private-public software firms, STPI and industrial association for development of software products and services. The Indian Government has taken many initiatives for promotion and adoption of Free & Open Source Software for increasing foreign exchanges, developing indigenous products and achieving vendor’s independence. The paper raise question about unavailability of indigenous software products as compared to Microsoft and other foreign vendor’s products in Indian market. Various institutions are still working on creation of indigenous software and in upcoming time novel products and technologies will be provided by India to domestic and global IT market.


INTRODUCTION
Information Technology is an important emerging sector for the Indian economic growth and employment (Vijayasri, 2013). The last decade was remarkable for the Indian IT industry in the form of Information Technology/ Information Technology Enabled Services (IT/ITES) industry that has transformed India's image on the global platform. India's cost competitiveness in providing IT services is approximately 3-4 times cheaper than the United States. IT-ITES industry has reached US$ 100 billion export revenues in the year 2012 (Bhattacharjee and Chakrabarti, 2015) and almost generated US$ 117 billion for the year 2016-17 (Deity, 2017).
IT-ITES industry has emerged as one of the most dynamic sector in India's economic development and is responsible for the global recognition of India as a 'soft' power. India is being recognised as the outsourcing destination of the world and known for its reliable and cost-effective delivery of cloud computing services. IT industry has set up over 600 delivery centres across DOI: 10.15415/jtmge.2017.82001 the world and providing services with presence in over 200 cities across 78 countries (Deity.gov.in, 2015).The industry has grown at compound annual growth rate (CAGR) of over 21% during the year 1998-2014. The Indian IT industry's contribution to GDP increased from 1. 2% in FY 1998to an estimated 8.1% in FY 2014(NASSCOM, 2014.
In the year 2000, IT industry added another changing dimension in form of BPO/ITES business. These BPO/ITES included call-centres, KPO, BPO, insurance claim processing, financial and accounting processing, non-banking services including insurance, pension, asset, management and market related services. Source: Own compiled on the basis of data given by Sharma, 2014 andDeity, 2017.

Note: IT-ITES-Information Technology -Information Technology Enabled Services
The preceding table indicate the broader picture of Indian IT-ITES Industry's export performance. IT services exports (excludes BPO, engineering and software products) is expected to be fastest growing segment in the year 2016-17 in terms of generating exports of USD 66.0 billion and ITES/BPO exports is USD 26.0 billion. The Software products and engineering services have generated export of US$ 25.0 billion in the year 2016-17. Above table shows the high demand of ITES/BPO services that affected production and export of indigenous software in domestic and international software market. Our local software firm's key interest is to attract foreign firms for ITES or BPO service and lesser in indigenous software product development.

Purpose and Objectives
The present study focuses on struggling growth of local software production in India in the current scenario. It also describes the government's role in

Methodology
The present study will be qualitative, quantitative and exploratory in its detail. The descriptive and analytical aspects of events and their interaction with various determining linkages at various levels will be explored. Study is based on secondary data collected through various reports of software companies such as TCS, INFOSYS, C-DAC, BISAG and NASSCOM, STPI reports along with government reports. The secondary information has been collected from text books, magazines, journals, newspapers and internet. Fagerberg (2005), states that, Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out in practice. As a theoretical framework the present study uses national innovation system because it permits to study activities, actors, norms, rules, relationships and other factors which influence innovation. Freeman (1987), describes NIS as the network of institutions in public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies. Lundvall (1992) explains, NIS as system of innovation constituted by elements and relationships which interact in creation, diffusion and use of new knowledge for economical purpose. Further, it is narrowly defined by Nelson and Rosenberg (1993) as a set of institutions whose interactions determine the innovation performance such as R&D institutions, technological institutions and universities.

PRESENCE OF SOFTWARE INDUSTRY IN INDIA
Software industry is seen as a key opportunity for developing countries like India for "socio-economic development" (Mohammed, 2010). By the 1990s, Indian software industry achieved superb advancement in the growth of employment, sales and export. The creation of NASSCOM in 1988 and later establishment of STP in 1990 shows serious approach of policy makers for the software industry. The establishment of STP scheme in various cities such as Bangalore, Delhi, Hyderabad, Bombay and Chennai facilitated private software firms to export software and thus entry into USA software market was ensured (Nicholson and Sahay, 2008). The software and services industry generated almost US$ 108 billion in export revenue for the year 2015-16 (STPI, 2016). The above figure 1 shows the presence of Indian and international IT software companies in India. There are dominant Indian software companies having share of 86%, multinational companies' share of 14% and global in-house centre having share of 18% in the Indian IT software industry. The government IT policies, schemes, establishment of NASSCOM, STP and SEZ parks are key contributors in the growth of Indian software companies (Kulkarni, 2015). The industry involves various emerging technologies such as Cloud Computing and Big Data. The emergence of cloud computing innovation added to technological breakthrough through improved products and services in Indian IT market (Buyya et.al, 2013). The use of this new technology by industries, government, non-government organizations and consumers are rapidly increasingly in the developing world. The cloud services market in India was $315 million in the year 2012 which is expected to grow to US$2 billion in 2018 (Kshetri et.al, 2017).

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Software
Software is a collection of commands and instructions for data processing and performing several tasks (Grohn, 1999). Software is designed and developed by computer engineers specifically aimed to manage day to day data transactions of enterprises, banks, educational institutes, hospitals and many more. Software developed with the help of programming languages can be defined as a complex and recombinant system of commands and instructions for data processing, besides being an intangible good which can be used only in discrete units (Engelhardt, 2008).The basic programs or commands or instructions is written in a specific software programming language (for example, C, C++, Python, Java, etc.) to tell the computer what to do in order to perform certain tasks. The list of commands or source programs (source code) is translated into machine level language so that computer can easily understand and execute the program.

Availabilities of Foreign and Indian Software Products
The  (Deity.gov, 2015). Table 2 and another table 3    The preceding table 3 indicates the availabilities of foreign and Indian software products for Smartphone and tablets. The Google also introduced several different version of Android operating system such as Cupcake, Lollipop, and Marshmallow for tablets and smart phone. The whole market of operating system for Smartphone and tablets is acquired by the foreign companies, namely Google, Sony, Apple, and Microsoft. Android OS almost covers all the latest functionality of Smartphone and provides fast service to users. The developing country like India is still working on creation of operating system like Android. India has not produced any indigenous operating system for Smartphone and tablets till now. In future latest technologies will be provided by India to national and international software market.

MAJOR ACTORS OF NIS FOR SOFTWARE DEVELOPMENT INDUSTRY IN INDIA
The 21 st century witnessed software sector as the largest and fastest growing sector of Indian economy. The Indian government is promoting 'Digital India programme' as an umbrella programme to prepare India for knowledge based transformation into a digitally empowered society along with knowledge based economy. The present study deals with major actors and networks of institutions in NIS that led to transition of Indian software industry since the early 1970s. The GOI has invested considerable resources to build finest infrastructure for the development of domestic software capabilities.
Journal of Technology Management for Growing Economies, Volume 8, Number 2, October 2017

Role of Higher and Technical Institutions
Higher and technical institutions of India are one of the biggest educational systems across the world being just after USA and China. Technical education is the most successful tool to create a knowledge-based society for the future world (MHRD, 2015).The growing technical, skilled and quality manpower created by several higher technical institutions is one of the major achievements in Indian education system. In the early 1960s, high demand and importance of higher technical education led to establishment of central, state engineering institutes and IITs

Role of Government at Policy Level
The Government of India played a significant role in the growth of IT-ITeS sector in India (Parthsarathi, 2004 (Kumar, 2001). Liberalisation of policies related to software industry The government took initial measures to liberalise the policy for software export by constituting EPZs and making provisions for easy and faster clearance of software export applications. Import duties on hardware were also reduced from 100% to 40%.

1981 Software Export Policy
According to this policy, the duty on hardware was increased in order to raise the demand of domestic computer system. Software development firms could also import 'loaned' computer system.

198New Computer Policy
The procedures of import simplified, import of application software products were allowed and import duty also decreased. Import duties on hardware decreased from 100% to 60% for software programmers. This policy provided many concessions such as firms getting loans from banks and duty exemptions. Software products were exempted from excise duty. Income tax exemption on net export earnings decreased from 100% to 50%.

1986 Software Policy
Government made this policy for promoting software exports. Computers systems used to develop software products for export could be imported duty free. However, the importer was expected to export software and earn 250% of the imported computer cost within 4 years. Software developed in India could be exported using satellite communication facilities and exporter communicates with their off-shore clients. Customs duty on imported computer system for software export was reduced.

1988
Software Technology Park Scheme

STP was established under the Department of Electronics & Information
Technology. It was autonomous body to encourage and support small-medium software exporters. The STP scheme is a 100% export oriented scheme for the development and export of software products and services. This scheme also provided single window clearance and permission of 100% foreign equity. STP units are 100% duty free on import of hardware and software. Units were exempted from payment of corporate income tax up to 2010. They were also provided infrastructure such as buildings, computers, high-speed satellite communication links and an uninterrupted power supply. The Act provides legal status for electronic governance by giving recognition to electronic records and digital signatures. It is the crucial law in India which deals with e-commerce and cybercrime. It permitted the use of digital signature on documents and also allowed to establish public key certifying authorities and permitted to convert any legal documents into digital form. It also specified legal punishment for 'Cybercrimes', for example hacking websites, databases or whole system, and financial frauds.

2005
Special Economic Zones Act The creation of SEZs in the country for generation of foreign exchange and attract FDI. 100% Income Tax exemption on export earnings from SEZs unit. Exemption from 'central sales tax', 'service tax' and duty free import. SEZs Act provided single window clearance and duty free import on hardware. This policy will encourage the formal adoption and use of OSS in government agencies. The source code of software will be available for the end-user to study and modify. Source code of software will be free from any royalty.
Source: Own compiled on the basis of data given by Athreye, 2005Rajaraman, 2010and GOI, 2015 Note: GOI-Government of India.

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Software Technology Parks in India (STPI)
STPI were setup in the year 1990 under the Department of Electronics and Information Technology. It created facilities of infrastructure such as buildings, R&D work stations, power supply, high speed internet and satellite links to the software companies registered in these parks. The Bangalore was first city where STPs were setup and it emerged as global IT Hub for software development (Rajaraman, 2010). STPI are located at 15 major cities in India such as Pune, Noida, Bangalore, Hyderabad, Thiruvananthapuram, Gandhinagar, Bhubaneshwar, Mohali, Jaipur, Mumbai, Mysore, Coimbatore, Manipal, Vizag, Guwahati and Chennai. The STP scheme is a 100% export oriented scheme for the development and export of software product and services. This scheme also provides single window clearance import certification, software valuation, permission of 100% foreign equity, marketing support and training facilities (Athreye, 2005).   (Rajaraman, 2010). At the end of year 2016, more than 2200 IT/ITeS firms were registered to NASSCOM. NASSCOM made significant contribution to create India's brand in domestic and international software development and services market. With the creation of major IT-Expo events and participating in international trade fair India became key player in global software market. Every year NASSCOM publishes an annual report which gives detailed information about member firms. Annual report contains all the information such as sales (import and export), employment generation, certification and information about registered company. The NASSCOM has become a reliable source of information related to software firms in India (Bhatnagar, 2006).

CONCLUSION
The Indian government is promoting 'Digital India' and 'Make In India' programmes as an umbrella programmes to prepare India for knowledge based transformation into a digitally empowered society along with knowledge based economy. The Government has been encouraging the growth of the sector by funding projects under various programs of Deity, DST, MHRD. The other stakeholders such as universities, technical research institutes and private -public firms such as TCS, INFOSYS, C-DAC, BISAG are also key important players in this area. The government had made policies to encourage the domestic software export and development of local firms during 1972 to till now. There are number of policy changes regarding software export duties and tax. The Department of Electronics and Information Technology has taken many initiatives for promotion and adoption of Free & Open Source Software for increasing foreign exchanges, developing indigenous products and achieving vendor's independence. Other side, India largely has Microsoft dependent environment and other foreign vendor's software products in terms of operating system and its usage in personal computers, tablets, smart phones. The software users are still dependent on Microsoft and other foreign vendor's software products for our personal computer's basic software such as operating system, office tools and also on other IT-business related software. Therefore, it is necessary to develop indigenous software products and services and create an encouraging environment for the growth of BOSS and other Indian products. There are also other necessary step must be taken for small domestic software market, slow and limited communication service, slow and expensive internet service, insufficient electricity, slow government operation and transportation services are also hurdles for IT-Software firms in India. The developing country like India is still working on creation of indigenous software products for desktop, laptops, smart phones and tablets. In future latest technologies will be provided by India to national and International software market.