rediff.com Business News: India's IT industry biggest gainer from Clinton's visit

India's information technology or IT sector reaped the lion's share of the economic windfall from President Bill Clinton's state visit last week, and industry insiders say the long-term rewards will be even greater.

Clinton's visit resulted in nearly $ 4.4 billion worth of business accords signed in various sectors -- the bulk of them in-principle agreements with Indian IT firms.

"Actually, the business deals are secondary," said Dewang Mehta, chief of India's 520-member National Association of Software and Services Companies or NASSCOM.

"What is significant is that Clinton acknowledged India as an emerging IT superpower. "We heard one message loud and clear throughout the presidential visit and that was India and the United States would work together in the IT sector, irrespective of any political differences," said Mehta.

Clinton himself drew special attention to the IT revolution underway in India by stopping off in the southern city of Hyderabad -- dubbed 'Cyberabad' since its emergence as one of the country's new software capitals.

In Hyderabad, Clinton announced a $ 5-million United States Agency for International Development or USAID programme over five years to boost Internet services in India, as a part of his goal to help poor countries close the 'digital divide' with the industrialised world.

US investment and contracts are following hot on Clinton's heels. Global software major Sun Microsystems has just announced plans to 'incubate' software and Internet firms in India -- something it has not tried in any other foreign market.

"India has great potential in terms of technology and business. This is the reason we are rolling out the programme exclusively for India," said a company official at Sun Microsystems.

Similarly, US firms Hewlett-Packard and Avid Softimage teamed up on Sunday with Indian software firm e-Imaging Technologies to set up a $ 30-million digital imaging centre in Hyderabad.

The Indo-US joint venture will play a role in meeting the software needs of the nearly $ 450-billion US entertainment industry, said Ganesh Ayyar, the India head of Hewlett-Packard.

Mehta said that countries such as the United States, Australia and Britain would also help Indian start-ups get the venture capital they required.

"In the next 18 months we expect $ 3 billion worth of venture capital funds to flow into the Indian IT sector," said Mehta.

Some of the funds have already started trickling in. On Monday, Australian media tycoon Kerry Packer announced the creation of a three-way venture capital fund worth $ 250 million to invest in Indian infotech and biotech companies.

The fund will be created with equal contributions by Packer, the head of Indian telecom firm Himachal Futuristic Communications Ltd Vinay Maloo, and stockbroker Ketan Parekh.

Barely a week before Clinton's visit, another media tycoon Rupert Murdoch visited the southern city of Bangalore, India's Silicon Valley and said he wanted to invest "several hundred million dollars".

NASSCOM says India's software industry is projected to earn $ 5.7 billion for the year to March 2000, recording a growth of approximately 50 per cent over the previous year's figure of $ 3.9 billion.

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