India's Small Biz Sees IT Growth

Almost one-sixth of all IT spending this year will come from small and midsize businesses in India that are investing in their Internet infrastructure, a recent study by AMI-Partners notes. Those SMBs will spend some $1.2 billion (U.S.); total IT spending is forecast at $7.7 billion.

A government policy, "Broadband Policy 2004," was specifically created to assist in accelerating the growth of broadband services in India. It offers tax incentives to companies offering Internet services, broadband networks, and other telecom services, and it encourages multinational corporations to take advantage of the policy.

The study found that the biggest spenders on Internet technologies among small businesses are those in the retail sector; among midsize businesses are those in manufacturing. India's economy grew by slightly more than 8 percent in 2005. SMB spending on Internet access is forecasted to amount to nearly $830 million this year, a 24 percent increase from last year.

Almost all midsize businesses and more than half of PC-using small businesses already have access to the Internet, but much of that is through dial-up rather than broadband access; the study found there is a growing demand for faster connectivity. Because Internet access provides a cost-effective communication link between firms, Internet demand is expected to grow further as Indian SMBs expand and increase their locations/branches.