Though the equations are well off as Domestic Indian It business does not contribute to Dollar income or exchange rate risk that is giving a lot of IT companies more profit, it is true that despite protestations of growth including the latest Gartner report professing a $79 bln business in India at 9% growth in 2012, there are considerably dull days ahead for Indian IT.

While the US offshoring market and even Europe has been near saturation and has gone into a policy twirl, the domestic business has slowed down to lessd than the expected $8 bln as policy making is held up on crucial issues like UID ( Accenture and Wipro among other bid for a $400mln piece of UID business, that may be over budget and is waiting on the bid , probably only to scratch it).

The situation with the UID business is by no means unique ads most public contracts , even more so (if possible) for public spending contracts outside India remain stymied in current economic environment, labor friendly policies being the only saving grace of any government trying to last its course

However non IT exports other than Garments are likely to be more profitable in Gems but more than that are likely to grow in volumes across otherwise restricted lists like rice, iron ore and more. Also the $71 bln business already in the door in India will stay and earn 4-5% more in profits over the year ( A quick calc by HMT CFO KV in he media today is on the mark at 40bps per 1% depreciation)  assuming the rupee at 22% depreciation over the year yields a minimum 10% extra in profit ( esp at companies that have not applied hedging to more than 1-2 month revenues..)

Posted via email from The India Investment Post