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BW Businessworld

'Restrictions On H1-B Visas Can Push Indian IT Industry Up The Value Chain'

Naushad Forbes, President, Confederation of Indian Industry (CII) speaks with BW Businessworld on India's growth potential and how the IT industry should gear up for the new US presidential regime

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While India's GDP is growing steadily at over 7 per cent, there are questions being raised on the country's potential to grow much faster than the current rate. India Inc, especially the IT industry, is also concerned about the protectionist measures announced by new American president Donald J. Trump. On the sidelines of the recently-concluded 23rd edition of the CII Partnership Summit, Naushad Forbes, President, Confederation of Indian Industry (CII) spoke with BW Businessworld on India's growth potential and how the IT industry should gear up for the new US presidential regime.

India is currently growing at a GDP of 7.6 per cent. Is this sustainable? What according to you should India's GDP growth target be and what will be the growth drivers?
For India, a growth of 7-8 per cent is normal for the next 25 years but we should have the aspirations to grow at 9-10 per cent. But if we want to grow at this rate, we need to have significant implementation of certain reforms on the ground…so, there is a need to reform our tax structure…the Indian industry in general need to investment much more in technology R&D…even within services, there is huge potential in many service sectors in employment creation…the top 3 sectors are education, healthcare, and hospitality & tourism. We have a population that is hungry for all of these…as a nation, the biggest growth driver is the movement of people from low productivity to higher productivity occupations and each of these professions - education, healthcare, and tourism - have the potential to create millions of jobs and if we can manage these in an effective way, we can create several high-paying jobs where they themselves will be the consumers and as they become consumers, that will drive everything else forward for the next 25 years and I think 9-10 per cent is entirely feasible.

How do you think the new US presidential regime under Donald J Trump will impact the Indian IT services industry?
There will certainly be an impact on the Indian IT industry. I don't know how the visa reforms will play out but it will be detrimental to the US if there are serious restrictions on the movement of professionals. What I don't think Trump will be able to control or restrict is, software from being developed in India for the US market. There could be a direct attempt to control the movement of workforce…and in the process of trying to restrict the movement of people, I think it will push the Indian IT industry up the value chain where they will move away from providing people to much more value-added approaches such as more fixed-price contracts and gradually even move to building products.

How should the Indian IT industry prepare itself for the Trump era?
They should certainly invest more in R&D. If you look at our IT services business in India and compare it with that of China, the top 10 firms in both the countries are of about the same scale and size. But the top 10 firms of India invest only 1 per cent of their revenue in R&D in contrast to those in China that invest 8 per cent. And I think that huge gap needs to be addressed. They need to learn how to invest productively in R&D.

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