'IT, steel witness robust growth in Karnataka'

Apart from being a major destination for the electronic and information technology (IT) industry, Karnataka has a huge potential for growth in the steel and engineering sector.

According to the recent Business Outlook Survey conducted by the Confederation of Indian Industry (CII) "" Southern region, there has been a growth of 25 per cent in IT and 20 per cent in steel for the period April""September 2005. The survey predicts a 25 per cent growth in revenue for the IT industry and 25 per cent increase in production & sales for the engineering industry in the second half of current fiscal (October""March '06).

The survey also said that a lack of road and physical infrastructure were the major bottlenecks hurting the growth of various sectors.

CII recently carried out a Business Outlook Survey of the five southern states of Andhra Pradesh, Karnataka, Kerala, Pondicherry and Tamil Nadu. The objective of the survey was to analyse the performance of the top five sectors in each of the states during the first half (April""September) of fiscal 2005-06, provide an outlook for the second half (October""March '06) and identify their issues and concerns.

The survey captured the views of the senior executives of the leading companies in each of the five sectors. The top five sectors for the survey were identified on the basis of their contribution to state gross domestic product (SGDP).

The information technology industry reported growth in revenues and overseas billings ranging from 20""25 per cent for the period April"" September '05. The hardware segment has almost doubled its revenues during the April""September '05 period due to higher volumes.

The software and services segment of the IT industry expects to continue its good run in the October""March '06 due to promising order book position. Owing to a 30-per cent growth in demand, the industry is hoping to increase its revenues by over 25 per cent. The hardware segment is expecting strong demand in the period October-March '06.

The engineering industry posted 11 to 15 per cent growth in sales in the April- September '05. The industry expects 25 per cent increase in production & sales owing to strong demand for the period October""March '06.

The industry felt that inadequate infrastructure, lopsided import policies and non-implementation of VAT in other states are some of the concerns affecting the growth of the sector.

The steel industry in Karnataka reported an increase in production ranging from 16-20 per cent for the period April""September '05. The industry forecast 11-15 per cent growth in demand & production for October""March '06 period.

The industry feels that the tariff relaxations will help exporters compete with global players. They suggested that value added tax (VAT) should be implemented in all states as their profitability is affected by transactions with parties in Tamil Nadu, where VAT is yet to be implemented.

Owing to strong domestic growth, the automotive and auto components industry in Karnataka posted a growth of 11-15 per cent in production and sales during April-September '05.

The industry expects the demand from the domestic market to grow between 11 and 15 per cent in the October""March '06 period and the production and sales to grow at about 10 per cent and 11 to 15 per cent respectively.

However, the industry feels that the hike in steel and aluminum prices were affecting operating margins and the delays in import clearance were driving the productivity of the industry downwards. The industry also urges for the removal of Central Sales Tax (CST).

Karnataka's electronics industry posted an impressive performance in terms of production and sales (11-15 per cent). The industry is looking forward to about 11 to 15 per cent growth in demand in the October""March '06 and hopes to improve sales through higher volumes.