Boston, MA -- (SBWIRE) -- 03/07/2013 -- BMI View: Indian IT spending is expected to reach US$24.4bn in 2013, up 19%, with government IT procurements at state and federal level helping to generate spending. Following double-digit growth in PC sales in H212, BMI expects a continued upwards trajectory in 2013, with IT Services in the vanguard. India's potentially vast IT market appears set to remain one of the region's growth opportunities owing to a growing economy and healthy consumer sentiment. Realisation of the market's long-term potential depends on raising India's low computer penetration and the government's ambitions to connect the vast rural areas to the outside world. The next layer of tier-3 and tier-4 towns, beyond the top 75 cities in India, is expected to be the major growth driver for the next few years, due to rising PC penetration.

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Headline Expenditure Projections

Computer Hardware Sales: US$9.7bn in 2012 to US$11.3bn in 2013, +17.0% in US dollar terms. Forecast in US dollar terms upwardly revised due to analyst modification following a pick-up in unit sales growth in Q212.

Software Sales: US$2.5bn in 2012 to US$3.1bn in 2013, +25% in US dollar terms. Forecast in US dollar terms upwardly revised due to macroeconomic factors, with a boost from Windows 8 and stronger demand for technology from the small and medium-sized enterprise (SME) segment.

IT Services Sales: US$8.1bn in 2012 to US$10.0bn in 2013, +21.0% in US dollar terms. Forecast in US dollar terms upwardly revised due to analyst modification and macroeconomic factors and a number of large projects are expected from the government and from other key verticals.

Risk/Reward Ratings: India's score is 42.1 out of 100.0, unchanged from the previous quarter. India still ranks ninth in our latest Asia RRR table, ahead of Thailand and Vietnam but behind China. The country achieved a relatively high IT Market score of 52.5, reflecting the potential returns, but its overall rating was lowered by a Country Structure score of just 15, the joint-second lowest in the region.

Key Trends & Developments.

- In 2013, there are expected to be strong growth opportunities in the next 200-400 smaller cities in India, where vendors are expanding their retail and distribution presence. Around 45% of new PCs sold in the Indian market are now shipping outside the top 75 cities. The government's policy of providing tax breaks and subsidies for hardware manufacturers should help keep prices down and support growth.

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