The (Shining) Rising Rupee

Nasscom, the India software industry trade body is meeting in Bangalore this week.

They are concerned about the impact that the high valued rupee is having on the software sector. They are concerned that rivals including China and the Philippines will increasing target India's burgeoning IT sector. It is not only the high valued rupee. Increased wage costs and real estate rents are also increasing the pressure on margins. Infosys, Wipro and other publicly owned companies have all recently reported results reflecting this trend.

A key component in Nasscom's plea to the Indian Government is to retain the Scientific Technical Park of India (STPI) status beyond its planned end date on March 2009. This provides a tax holiday for approved software companies engaged in 100% export focus. Nasscom want to increase this for a further ten years.

Both China and the Philippines are offering similar incentives beyond this date. And this is beginning to attract long-term inward investment. Watch out for Vietnam. They are moving into the same space.

As I sit in the office in Bangalore, I reflect on where NZ sits in all this. I have commented enough on this blog about the importance of NZ ICT companies engaging with the global market. The competition that is currently growing between these Asian giants is likely to further marginalise ICT in NZ from the global market. Listening to Nasscom of all people, complaining about growing offshore competition, is pretty interesting and not a little scary.