Domestic software products ecosystem in light of COVID19 package

Introduction

The Ministry of Information Technology (“MeitY”) has been fast-tracking its ambitious five thousand crore rupees (Rs. 5,000 crore) fund-of-funds targeted at deploying domestic capital into India’s software products ecosystem, as the Government is reopening the economy in a phased manner after a national lockdown spanning almost three (3) months.

The finance ministry is considering tapping the country’s bellwether information technology services companies, including TATA Consultancy Services (TCS), Infosys and Wipro, to serve as limited partners or investors in the fund.

There is a preference towards raising domestic or Rupee capital instead of foreign aided fund for the proposed five thousand crore rupees (Rs. 5,000 crore) fund-of-funds. The domestic companies such as TCS and Infosys which carry good valuation are being encouraged to show interest in software product development and help invest in the fund-of-funds in order to fast-track domestic development of the software industry in India.

India’ position in the global software product market

India’s share in the global software product market is miniscule and the country is a net importer of software products as of the total software business of eight point two billion dollars (USD 8.2 billion) in the country, India’s exports amount to just two billion dollars (USD 2 billion). India does well in software services and the country’s next big opportunity is in software products.

National Policy on Software Products, 2019

The National Policy on Software Products, 2019 (“Policy”) had been approved by the Union Cabinet in 2019. The Policy is aimed at developing India as a software productnation. An outlay of one thousand five hundred crore rupees (Rs. 1500 crore), divided into Software Product Development Fund and Research and Innovation Fund is envisaged to implement the programmes/schemes envisaged under this Policy over a period of seven (7) years. The Policy is aimed at giving a direction for the formulation of several schemes, initiatives, projects and measures for the development of software products sector in the country as per the roadmap envisaged therein.

The Policy is inclusive of five (5) missions:

(i) To promote the creation of a sustainable Indian software product industry, driven by Intellectual Property (IP), leading to a ten (10) fold increase in India’s share of the global software product market by 2025. The software product ecosystem is characterised by IP creation and large value addition increase in productivity, which has the potential to significantly boost revenues and exports in the sector, create substantive employment and entrepreneurial opportunities in emerging technologies and leverage opportunities available under the Digital India Programme, thus, leading to a boost in inclusive and sustainable growth.

(ii) To nurture ten thousand (10,000) technology start-ups in the software product industry, including one thousand (1,000) such technology start-ups in Tier-II and Tier-III towns and citiesand generating direct and indirect employment for three point five (3.5) million people by 2025. In order to create a conducive ecosystem, a programme of incubation will be initiated to nurture at least ten thousand (10,000) software product start-ups, thereby generating direct and indirect employment for one million persons. The programme will provide - (a) technical and infrastructural assistance; (b) mentoring support; (c) seed fund; (d) research and development and testing facilities; and

(e) marketing and branding support.

(iii) To create a talent pool for software product industry through (a) up-skilling of ten lakh (10,00,000) IT professionals, (b) motivating one lakh (1,00,000) school and college students and (c) generating ten thousand (10,000) specialized professionals that can provide leadership. For catering to large scale requirement of trained manpower in futuristic technologies, a FutureSkills programme has been initiated for upskilling/re-skilling of three million IT Professionals in emerging technologies. For creating a talent pool of one million IT professionals with competencies required for IP driven software products, a special emphasis on modules related to software products will be added into the programme. This will be implemented through - (a) modification in existing course curriculum; (b) short term training programme; and (c) national competency tests in consultation with the industry.

The programme will be implemented in partnership with educational institutes, both public and private, identified industry bodies and the National Skill Development Mission.

(iv) To build a cluster-based innovation-driven ecosystem by developing twenty (20) sectoral and strategically located software product development clusters having integrated infrastructure, marketing, incubation, research and development/test-beds and mentoring support.The registry of Indian software products will be integrated with Government e-market (GeM) and will also provide necessary handholding for marketing support. Additionally, Micro, Small and Medium Enterprises (MSMEs) will be encouraged to develop solutions for ‘Smart Cities’, healthcare, agriculture, e-learning, transport, fin-tech and addressing social challenges, such as, bridging digital divide, gender inequality, empowering the less privileged citizens. A series of hackathons will be organised to identify such startups / MSMEs, who will be suitably rewarded on successful development.

(v) In order to evolve and monitor the schemesand programmes for the implementation of thePolicy, the National Software Products Mission will be set up with participation from Government, Academia and the Information Technology (IT) Industry. The same aims to achieve the following objectives:

(a) Design appropriate strategy for development of the software product industry to ensure optimum utilization of its potential and to establish India as a global Software Product Hub;

(b) Recommend specific policy measures to ensure an enabling ecosystem for design, development, innovation, value addition etc;

(c) Recommend specific initiatives to be undertaken to tap the full potential of the domestic and the international markets for the Software product industry;

(d) Monitor and collate various initiatives taken under this policy with an aim to create threepoint five million employment opportunities and boost software products revenue tenfold by 2025;

(e) Facilitate various Government agencies and other bodies in promotion of Software Products, specific to the various programmes envisaged under this policy;

(f) Encourage States to participate in programmes and promote Indian Software Products in line with this policy.

Conclusion

The Indian IT Industry is predominantly a service Industry. It is necessary to move up the value chain through technology-oriented products and services to ensure sustainability. Hence to create a robust software product ecosystem the Government approved the National Policy on Software Products, 2019 to develop India as the global software product hub,driven by innovation, improved commercialisation, sustainable Intellectual Property which is now being fast-tracked towards raising domestic capital for the proposed five thousand crore rupees (Rs. 5,000 crore) fund-of-funds.

This update is by Shambhavi Singh, Advocate & Associate at Agarwal Jetley & Co., Advocates & Solicitors. Contact: Email: shambhavisingh@agarwaljetley.com or Mob: (+91) - 9650424966