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Software exporters may gain in short-term

Our Bureau

MUMBAI, Aug. 2

THE falling rupee may translate into a short-term increase in profitability for Indian software exporters. However, depreciation is unlikely to have any significant impact on exports in the long run.

According to Mr. Mohan Das Pai, Chief Financial Officer, Infosys Technologies Ltd, in the initial phase, a depreciation will obviously help exporters. But given a high trade deficit, imports will become costlier and would lead to internal inflation. ``Ho wever, since software exports do not rely too much on the internal economy, depreciation will be beneficial but only in the short run.''

``The declining rupee will have a marginal impact as software exports are no longer driven by costs but by quality,'' said Ms. Vandana Gangwar, Senior IT Analyst, ICRA.

There is unlikely to be any major change in the bulk orders and they will continue to grow at the estimated rate, according to Ms. Gangwar.

In its annual survey, Nasscom had recorded a 57 per cent growth in software exports for 1999-2000 with a revenue of Rs. 17,150 crores ($4 billions). For 2000-2001, the survey had projected that the Indian software exports would gross $6.3 billions and th e industry sees no change in this figure on account of a depreciated rupee.

``The depreciation will have a greater impact on profitability rather than income. However, since the fall is not too significant the effect will only be temporary,'' said Mr. A. Desai, Chairman and Managing Director, Mastek Ltd.

Mr. C.R. Kanan, Senior General Manager, Corporate Communications, DSQ Software Ltd agrees: ``since 60 per cent of DSQ Software's revenues comes from US markets, the depreciation will increase profitability proportionately''. ``The only way to increase co mpetitiveness of Indian software exports is to increase productivity. We cannot rely on a declining rupee to increase exports,'' Mr. Pai added.