India’s 2014-2015 Budget: A Gold Rush For Tech Vendors

The new Indian government announced its maiden 2014-2015 budget yesterday. Forrester views the latest budget as progressive, pragmatic, and a step toward building a “new” India. We expect the aggressive push on infrastructure and manufacturing as well as the focus on reforms to help lift India out of its economic doldrums. Here, in no particular order, are Forrester’s top five takeaways from the budget from an ICT spending perspective:

  • A thrust toward clean energy will drive technology investments. The Indian government realizes that it will be difficult for the energy sector to meet rising demand without new power generation capacity. We expect the increased focus on clean energy to drive demand for smart grid technologies and industry specific solutions. Clean generation companies are also likely to look for innovative business models from their service providers.
  • The software and services markets will benefit from increased defense spending. The Indian government has increased foreign direct investment in the domestic defense industry from 26% to 49% and increased the defense budget by 12% over last year. Forrester expects a large part of this spending to target IT infrastructure modernization, computer design services, IT facilities management, analytics, and industry-specific software. System integrators and specialized ISVs focused on the defense sector, in particular, will benefit the most from increased spending in this area.
  • The massive push for education will accelerate technology adoption. Planned investments in new institutions for higher education and improved elementary education will generate substantial opportunities for device sales (desktops, laptops, and tablets), classroom technologies like interactive engagement, and back-office technologies like CRM, ERP, BI, and Smart Campus. Also, initiatives such as the “Pandit Madan Mohan Malviya New Teachers Training Programme” will drive investments in technology tools and training.
  • Smart cities will attract investments across all layers of ICT. The Indian government has allocated US$1.2 billion for the development of 100 smart cities in the country. Cities and their private-sector partners will invest in all layers of ICT infrastructure in order to realize smart city initiatives. In particular, hotspots for growth will be technology consulting, networking, telecommunications, and other hardware infrastructure, middleware, sector-specific applications, telecom and managed services, and systems integration.
  • Efforts to boost domestic manufacturing will be supported with technology. The Indian government has announced various initiatives to revive the lackluster performance of the manufacturing sector. These initiatives will be supported by technology as companies seek to implement improved productivity, efficiency, and cost-effectiveness measures. In particular, we expect ERP, CRM, SCM, manufacturing operations, product life-cycle management, and BI to be in demand.

While India’s new budget provides massive growth opportunities for technology vendors and service providers, these opportunities will be tempered by one fundamental issue: a lack of execution. The role of the Department of Electronics and Information Technology is restricted to developing frameworks and guidelines rather than driving more comprehensive leadership. The need of the hour for the Indian government is to adopt the CIO role at the federal and state levels to gain maximum benefits from these promised investments.