Investment in the information technology (IT) sector has witnessed a sluggish pace of growth in Gujarat over the past four years, according to the Associated Chambers of Commerce and Industry of India (Assocham). 

According to an Assocham report titled Gujarat - An emerging hub for ICT, the State has clocked a meagre two per cent compounded annual growth rate (CAGR) in attracting IT investments, which grew from about ₹38,939 crore to ₹39,692 crore in four years from December 2009 to December 2013.

However, the report noted that Gujarat has emerged the second-most preferred investment destination for the IT sector with about 17 per cent share in total outstanding investments by the IT sector across India as on December 2013.

Karnataka ranked at the top with 27.5 per cent of total outstanding investments attracted by the IT sector across India. Other States with significant share in total outstanding investments attracted by the Government and private (both domestic and foreign) sources in the IT sector included Kerala (12 per cent), Odisha (eight per cent), Tamil Nadu (seven per cent), Haryana (six per cent), Andhra Pradesh (six per cent) and West Bengal (five per cent), among others.

However there is some hope as just about 10 per cent investment worth about ₹4,000 crore attracted by the IT sector in Gujarat remained a non-starter, while projects with remaining investments were in different stages of implementation. “The share of investment projects in a limbo has declined from about 22 per cent to just about 10 per cent in four years,” said D S Rawat, Secretary-General of Assocham, adding that the absence of major IT-ITeS companies in the State has resulted in a talent drain from it.

“Gujarat holds tremendous scope for innovation in the IT sector and the key cities of Ahmedabad, Rajkot, Surat, Gandhinagar and Vadodara are probable hubs for the IT-BPO sector,” Rawat said.

According to the report, a relative analysis of Ahmedabad as an emerging IT-BPO destination as compared to other established destinations revealed that while business catalysts such as Government incentives, outsourcing maturity of the location and the current quality of life are in favour, the city needs to improve its risk profile and reduce the cost of operations.

Nationally, the IT sector grew at a CAGR of over 13 per cent, with the total outstanding investment of the top 20 States at ₹ 2.36 lakh crore in December 2013, up from ₹2 lakh crore as of December 2009.

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