No dis­crep­ancy in IT ex­ports data, says Nasscom’s Premji

Mint ST - - CORPORATE - Feed­[email protected] NEW DELHI

Di­ver­gence in RBI and in­dus­try lobby num­bers on ac­count of how both clas­sify the rev­enue, says Premji

Nasscom chair­man Rishad Premji dis­missed any talk of in­flat­ing the size of In­dia’s in­for­ma­tion tech­nol­ogy (IT) sec­tor and said the di­ver­gence in the $126 bil­lion in ex­ports pen­ciled in by the in­dus­try body against $77 bil­lion es­ti­mated by the Re­serve Bank of In­dia (RBI) is pri­mar­ily on ac­count of how the two groups clas­sify the rev­enue.

Nasscom’s de­nial came after a re­port by a Jpmor­gan Chase an­a­lyst at­trib­uted the wi­den­ing gap be­tween Nasscom’s IT ex­port es­ti­mates and soft­ware ex­ports in bal­ance of pay­ments (BOP) on both clas­si­fi­ca­tion and in­flat­ing in­dus­try size.

“There is no dis­crep­ancy,” Nasscom chair­man Rishad Premji said in an in­ter­ac­tion with jour­nal­ists at Mint’s news­room in Delhi on Wed­nes­day.

“We are not claim­ing to rec­on­cile the BOP and ex­ports. We (Nasscom’s mem­ber com­pa­nies) have sub­sidiaries in the US, and all over the world, that would ac­count for 60-70% of the dif­fer­ence be­tween RBI and Nasscom,” he added.

Sangeeta Gupta, se­nior vice pres­i­dent and chief strat­egy of­fi­cer at Nasscom, said, “Please un­der­stand that bal­ance of pay­ments is a very dif­fer­ent ter­mi­nol­ogy from what we term as ex­ports.”

“What Nasscom pub­lishes is the ex­ports data, and our ex­ports defi- RBI’S num­bers show soft­ware ex­ports grew from $50 bn in FY10 to $77 bn in FY18 against Nasscom’s es­ti­mate of $50 bn to $126 bn ni­tion is 100% owned sub­sidiaries over­seas as well as on-site ex­ports. What RBI counts is money that flows in the coun­try through au­tho­rized for­eign deal­ers in the coun­try,” she added.

A 26 Novem­ber note by Jpmor­gan Chase and Co. an­a­lyst Viju Ge­orge said that ac­cord­ing to RBI’S BOP num­bers, soft­ware ex­ports have grown from $50 bil­lion in FY10 to $77 bil­lion in FY18, as against Nasscom’s es­ti­mates of ex­ports grow- ing from $50 bil­lion to $126 bil­lion dur­ing this time.

This 63.6% di­ver­gence in the two data sets was first dis­cussed by Mint colum­nist Sid­dharth Pai, in his col­umn dated 4 De­cem­ber, who said for cal­cu­lat­ing soft­ware ex­ports, be­gin­ning 2011, RBI started us­ing bank­ing chan­nel data from re­ceipts through the For­eign Ex­change Trans­ac­tions Elec­tronic Re­port­ing Sys­tem.

“[T]here are both clas­si­fi­ca­tion & in­dus­try-size es­ti­ma­tion is­sues - these two to­gether ac­count for ~75% of the ab­so­lute gap,” wrote Ge­orge at Jpmor­gan in his note ti­tled Dis­sect­ing the wi­den­ing gap be­tween Nasscom’s In­dia IT ex­port es­ti­mates and soft­ware ex­ports in In­dia’s BOP.

“~50-60% of the ab­so­lute gap arises due to over­seas in­come gen­er­ated by for­eign af­fil­i­ates (sub­sidiaries, as­so­ciates, branches, etc.) of In­dia IT firms, which by­passes BOP. Then there is some level of over-es­ti­ma­tion by Nasscom of rev­enues from Gics/mncs/oth­ers re­sult­ing in likely over-sizing in­dus­try by 8-10%, which ex­plains ~20-23% of the gap,” wrote Ge­orge.

This is prob­a­bly for the first time in the last two decades when an an­a­lyst has ques­tioned Nasscom’s es­ti­mates.

Sig­nif­i­cantly, this devel­op­ment also comes at a time when the in­dus­try body is look­ing to align it­self with the sweep­ing changes im­pact­ing the in­dus­try: Higher share of dig­i­tal busi­ness has made many of the old met­rics re­dun­dant, and for this rea­son, Nasscom is look­ing at both qual­i­ta­tive and quan­ti­ta­tive pa­ram­e­ters to re­flect the changes.

Fi­nally, Nasscom’s an­nual growth fore­cast too has been ques­tioned by many an­a­lysts and ex­ec­u­tives, who have ar­gued that since Tata Con­sul­tancy Ser­vices Ltd, In­fosys Ltd and Wipro Ltd now ac­count for 23% of coun­try’s $167 bil­lion IT in­dus­try, it is not ac­cu­rate and cor­rect to ex­pect these com­pa­nies to grow at a pace sim­i­lar to that of smaller firms.

“Our es­ti­ma­tion is con­ser­va­tive rather than be­ing over the top. We take num­bers on the lower side for a lot of these com­pa­nies,” said Gupta.

Nasscom said many of the GICS and other pri­vate firms share their num­bers with Nasscom al­though these firms do not make their num­bers pub­lic.

“Please re­mem­ber RBI data was pre­pared with on­site ra­tio of 20%. The on-site per­cent­age has moved to 40%. So these are just many of the sub nu­ances,” said Gupta of Nasscom.

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