"Ladies and Gentlemen,

I am delighted to be here today at this very important gathering of the leading lights of an industry which is the torch-bearer of India's image in the world, an image which is increasingly positive and commands ever-increasing respect and admiration. You very appropriately call your gathering a "leadership forum". Your industry has indeed provided great leadership to Indian enterprise and creativity in the past decade. I commend you for your good work and wish you the best in years to come. I am sure that for each one of you the best is yet to come.

The entire gamut of Information Technology related services - including software and services, data and business processing services and IT enabled services - have emerged as a large knowledge-based sector of our economy. The industry has not only come into its own, both in terms of investment and employment, but is also having a positive knock-on effect on other manufacturing and services sectors. It is contributing to increased productivity and competitiveness across a wide range of activities. I compliment the entrepreneurship, the creativity, the professionalism and the energy of all the professionals and business leaders associated with this sector.

Ladies and Gentlemen,

Forums like yours are important opportunities for reflecting on the present situation of the industry, on its future outlook, and on the challenges ahead. In the past, this sector has grown with little involvement of the Government. Possibly as a result, it has been one of the most open sectors with little in terms of regulatory constraints. It has utilized this openness to tap into phenomenal commercial opportunities that have emerged across the globe. We are committed to the growth of this flagship sector and will do all that is possible in the realm of the government to promote its sustained growth and success.

Last year, electronics and IT sector exports were estimated to be US $25 billion, crossing the magic figure of Rupees one lakh crores and accounting for a fifth of our exports. This made it the leading export sector of our economy. I believe NASSCOM has set an export target of US$60 billion by 2010. But we must be more ambitious. Considering the way in which our economy and exports are rising, this target should be met by 2008 and by 2010, we should be looking at a target of US$80 billion.

Obviously such growth targets will not come easily. Competition from around the world is growing. We need to work hard to retain our edge and even harder to increase our share of the world market. The software industry must move towards providing system solutions. In the field of business process outsourcing (BPO), we must not only retain our first mover advantage, but move up the value chain. To be able to do so, our BPO industry should increasingly become a knowledge process outsourcing (KPO) industry. It should leverage on the high quality human capital that exists in the country in a wide range of fields - in engineering, architecture, medicine, law, accountancy, finance, management, and entertainment. This transition from BPO to KPO will require broad-basing the knowledge economy and improving its capabilities. It will also require the same degree of openness that is seen in the IT sector. It will also require a high level of ambition each one of you. My advice to you is - do not rest on your laurels; aim to conquer new frontiers.

Ladies and gentlemen,

While the government may have played a marginal role in the growth of the sector in the past, I believe that it does have a facilitative role to play in maintaining and building on its competitive advantages. We have been among the early countries to have put in place the legal infrastructure for electronic transactions and e-commerce. We are already amending the Information Technology Act to keep pace with changes in technology. The policy framework will continue to be supportive and enabling, rather than a barrier to progress and innovation.

The government can play a role in expanding the domestic market. After all, our leadership in IT cannot be sustained for long on the basis of export markets alone. Every sector of our economy must be more e-enabled. There are huge opportunities for this waiting to be tapped in almost all major sectors, including agriculture. We are working to make our economy a more knowledge based one. In government, we are taking steps to e-enable government systems. Several large e-governance initiatives launched by the government under the National E-Governance Plan are expected to provide sustained growth in domestic demand for IT services over the next few years. Many government processes are being re-engineered and outsourced. This has expanded the domestic market for IT and IT-enabled services. As we proceed ahead with administrative reforms, we will find IT playing an increasing role in transacting government business. This will increase the efficiency and cost-effectiveness of delivering public services - something that we must do on priority.

State governments too can play an important role in expanding the market for IT and IT enabled services. Some state governments have been more active than others in e-enabling government systems. In fact, states are in many ways laboratories for experimenting with new processes which are then expanded on a nationwide scale. The computerized tracking and monitoring of the NREGA in Andhra Pradesh is but one such example. We need many more such examples.

Ladies and Gentlemen,

I am aware that we have to improve the quality of our infrastructure and our human-resource base. I have seen a presentation by NASSCOM on this. This is a priority for our Government and we will remain focused on it. At one time, the IT industry used to worry a great deal about our telecom infrastructure. But this is no longer an issue. Through a combination of pragmatic reforms and liberalization, we have been able to get competition - and better service levels - into the telecom industry, making it one of the success stories of the past decade. The IT industry has greatly benefited from the telecom revolution in India. We will continue to modernize this sector. We will open up the required spectrum to support its growth.

As for physical infrastructure, an urban based globalised sector like yours must get world class infrastructure. This is one of the aims of the Jawaharlal Nehru National Urban Renewal Mission which we launched last year. This Mission, which has taken off really well, has generated an immense amount of activity in urban infrastructure development. I foresee major improvements in a large number of cities. Where possible, states can develop specialized "knowledge townships" which can be clusters of knowledge, innovation and excellence in IT. There are visible improvements in roads, railways and air travel which will get better in future.

Ladies and Gentlemen,

Our biggest challenge is, of course, in relation to human resources. While we produce a large number of graduates and technologists, the demand of the IT industry is growing and is becoming more discerning. I am aware that we have a quantity problem and a quality problem. I am aware that the problem has to be tackled in different time-frames: the short-term, medium-term and long-term. In the short-term, we need programmes to top up the skill level of graduating students through "finishing schools" and "finishing programmes" which will help resolve the quality problem. In the medium term, this kind of training needs to be back-ended into the formal system itself by improving the quality of our technical and general education programmes at the graduate level. This will make graduates far more employable.

In the long-term, we need to address the quantity problem. The education system needs to be expanded rapidly at all levels. The success of our education initiatives at the grass-root level, along with the favourable demographics of India will ensure that a far greater number pass out of high school each year. Vast numbers of these would, quite rightly, aspire to go to universities. Therefore, a quick expansion of the system is necessary to cater to much larger numbers at the secondary and collegiate levels. We also need to see how we can attract more people into teaching and make it a more attractive and respected profession. This would also require a huge expansion in our Masters and doctoral programmes. The current picture is not particularly heartening. Easing the supply constraint requires more investment as well as a radical reform of our education system. I expect the Eleventh Plan to address this important issue and provide the necessary resources and approaches for achieving the desired expansion. In this national endeavour, industry and government need to work together.

While your sector has shown impressive performance by any standards, beyond a point it is difficult to keep improving on parameters like customer satisfaction, quality, cost and time if work continues to be done in the same way. Business cannot be as usual for all times to come. Doing things differently is the way of the future. Large productivity gains and rapid growth can come in future only from innovation. As our capabilities in the knowledge sector grow, our ambition of being a knowledge powerhouse depends upon that key ingredient which drives the knowledge economy: innovation.

We in India, with our vast diversities in every area that you can think of, are well placed to be different and therefore, creative and innovative. There is growing international recognition of our innovative abilities. In recognition of this, we propose to take a number of steps to enhance the overall innovation eco-system. We need a focused strategy on innovation. I welcome any ideas that you may have in this regard. We have constituted a High Level Group in the Planning Commission to look into all aspects influencing the performance of the Services Sector and suggest policy measures which would need to be taken to sustain competitiveness. Some of those present here are members of this group. As this group finalises its recommendations, we will take all possible measures to support innovation, competitiveness and sustained growth of this important services sector.

Ladies and Gentlemen,

While the IT story is a remarkable story, there are millions of people whose lives are still untouched by it. This is a failing - but also an opportunity. Technology-based innovations in health-care, education, agriculture and rural development are essential to lend substance to our agenda of inclusive growth. Just as we have 'inclusiveness' in banking, we need 'inclusiveness' in IT. We need to ensure that our large rural population gets the benefits of the IT explosion - in terms of better public services, greater employment opportunities and better lifestyles. The IT industry must aim to reach out to the hinterland - to Tier II and Tier III cities and even to villages. It can focus on solutions which can benefit the farmer, the artisan, the weaver, the home-worker. This is an obligation to the nation and I am sure you will fulfil it. I hope your Leadership Forum will come forward with concrete and workable ideas that we can implement in partnership with State governments and the industry.

Let me once again acknowledge the tremendous good work done by Nasscom and its members in taking India forward in the knowledge economy. I compliment Mr Kiran Karnik for his enthusiastic championing of your industry's cause. His has been a labour of love. I wish him and all of you well.

Your sector has altered forever India's global standing. It has raised the expectations of our people and of the world. India is today judged by the standards you have set for performance and productivity. I commend you on your good work and I urge you set even higher standards for the future.

May your path be blessed."