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BSE SENSEX, also called the BSE 30 or simply the SENSEX, is a free-float market capitalization-weighted stock market index

of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies which are some of the largest and most actively traded stocks are representative of various industrial sectors of the Indian economy. Published since January 1, 1986, the SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79. On 25 July, 2001 BSE launched DOLLEX-30, a dollar-linked version of SENSEX. As of 21 April 2011, the market capitalization of SENSEX was about 29,733 billion (US$593 billion) (42.34% of market capitalization of BSE), while its free-float market capitalization was 15,690 billion (US$313 billion).

The Bombay Stock Exchange (BSE) regularly reviews and modifies its composition to be sure it reflects current market conditions. The index is calculated based on a free float capitalization methoda variation of the market capitalization method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by promoters, government and strategic investors. Initially, the index was calculated based on the full market capitalization method. However this was shifted to the free float method with effect from September 1, 2003. Globally, the free float market capitalization is regarded as the industry best practice. As per free float capitalization methodology, the level of index at any point of time reflects the free float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is multiplied by a free float factor to determine the free float market capitalization. Free float factor is also referred as adjustment factor. Free float factor represents the percentage of shares that are readily available for trading.

The calculation of SENSEX involves dividing the free float market capitalization of 30 companies in the index by a number called index divisor. The divisor is the only link to original base period value of the SENSEX. It keeps the index comparable over time and is the adjustment point for all index adjustments arising out of corporate actions, replacement of scraps, etc. The index has increased by over ten times from June 1990 to the present. Using information from April 1979 onwards, the long-run rate of return on the BSE SENSEX works out to be 18.6% per annum, which translates to roughly 9% per annum after compensating for inflation.

The BSE Sensex currently consists of the following 30 major Indian companies as of 17 February 2012 Sl.no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Company Housing Development Finance Corporation Cipla Bharat Heavy Electricals State Bank Of India HDFC Bank Hero Motocorp Infosys Oil and Natural Gas Corporation Reliance Industries Tata Power Hindalco Industries Tata Steel Larsen & Toubro Mahindra & Mahindra Tata Motors Hindustan Unilever Industry Consumer finance Pharmaceuticals Electrical equipments Banking Banking Automotive Information Technology Oil and gas Oil and gas Power Metals and Mining Steel Conglomerate Automotive Automotive Consumer goods Scrip 500010 500087 500103 500112 500180 500182 500209 500312 500325 500400 500440 500470 500510 500520 500570 500696

17 18 19 20 21 22 23 24 25 26 27 28 29 30

ITC Sterlite Industries Wipro Sun Pharmaceutical GAIL ICICI Bank Jindal Steel & Power Bharti Airtel Maruti Suzuki Tata Consultancy Services NTPC DLF Bajaj Auto Coal India

Conglomerate Metals and Mining Information Technology Pharmaceuticals Oil and gas Banking Steel and power Telecommunication Automotive Information Technology Power Real estate Automotive Metals and Mining

500875 500900 507685 524715 532155 532174 532286 532454 532500 532540 532555 532868 532977 533278

Source: SOME OF THE HISTORICAL REPLACEMENTS WERE:


DLF replaced Dr. Reddy's Lab on November 19, 2007. Jaiprakash Associates Ltd replaced Bajaj Auto Ltd on March 14, 2008. Sterlite Industries replaced Ambuja Cements on July 28, 2008. Tata Power Company replaced Cipla Ltd. on July 28, 2008. Sun Pharmaceutical Industries replaced Satyam Computer Services on January 8, 2009 Hero Honda Motors Ltd. replaced Ranbaxy on June 29, 2009 Cipla to replace Sun Pharma from May 3, 2010 Grasim replaced JSPL in 2010 Bajaj Auto replaced ACC from Dec 6th, 2010 Coal India replaced Reliance Infrastructure and Sun Pharmaceutical replaced Reliance Communications from Aug 8th, 2011.

Milestones of Sensex
Here is a timeline on the rise of the SENSEX through Indian stock market history.

1000, July 25, 1990 - On July 25, 1990, the SENSEX touched the four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results.

2000, January 15, 1992 - On January 15, 1992, the SENSEX crossed the 2,000mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and current Prime Minister Dr Manmohan Singh.

3000, February 29, 1992 - On February 29, 1992, the SENSEX surged past the 3000 mark in the wake of the market-friendly Budget announced by Manmohan Singh.

4000, March 30, 1992 - On March 30, 1992, the SENSEX crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and SENSEX witnessed unabated selling.

5000, October 11, 1999 - On October 8, 1999, the SENSEX crossed the 5,000mark as the Bharatiya Janata Party-led coalition won the majority in the 13th Lok Sabha election.

6000, February 11, 2000 - On February 11, 2000, the information technology boom helped the SENSEX to cross the 6,000-mark and hit and all time high of 6,006.

7000, June 21, 2005 - On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance

Energy, Reliance Capital and IPCL made huge gains. This helped the SENSEX crossed 7,000 points for the first time.

8000, September 8, 2005 - On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index the SENSEX - crossed the 8000 level following brisk buying by foreign and domestic funds in early trading.

9000, December 9, 2005 - The SENSEX on November 28, 2005 crossed 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors.

10,000, February 7, 2006 - The SENSEX on February 6, 2006 touched 10,003 points during mid-session. The SENSEX finally closed above the 10,000-mark on February 7, 2006.

11,000, March 27, 2006 - The SENSEX on March 21, 2006 crossed 11,000 and touched a peak of 11,001 points during mid-session at the Bombay Stock Exchange for the first time. However, it was on March 27, 2006 that the SENSEX first closed at over 11,000 points.

12,000, April 20, 2006 - The SENSEX on April 20, 2006 crossed 12,000 and touched a peak of 12,004 points during mid-session at the Bombay Stock Exchange for the first time.

13,000, October 30, 2006 - The SENSEX on October 30, 2006 crossed 13,000 for the first time. It touched a peak of 13,039.36 and finally closed at 13,024.26.

14000, December 5, 2006 - The SENSEX on December 5, 2006 crossed 14,000. 15,000, July 6, 2007 - The SENSEX on July 6, 2007 crossed 15,000 marks. 16,000, September 19, 2007 - The SENSEX on September 19, 2007 crossed the 16,000 mark.

17,000, September 26, 2007 - The SENSEX on September 26, 2007 crossed the 17,000 mark for the first time.

18,000, October 9, 2007 - The SENSEX on October 9, 2007 crossed the 18,000 mark for the first time.

19,000, October 15, 2007 - The SENSEX on October 15, 2007 crossed the 19,000 mark for the first time.

20,000, October 29, 2007 - The SENSEX on October 29, 2007 crossed the 20,000 mark for the first time.

21,000, Jan 08, 2008 - The SENSEX on January 8, 2008 touched all time peak of 21078 before closing at 20873.

November 5, 2010 - The SENSEX on November 5, 2010 closes at 20,893.6 with highest peak in two years.

Graph of SENSEX from July 1997 to March 2011.

SENSEX_graph.png (793 333 pixels, file size: 24 KB, MIME type: image/png) May 2006 On May 22, 2006, the SENSEX plunged by 1100 points during intra-day trading, leading to the suspension of trading for the first time since May 17, 2004. The volatility of the SENSEX had caused investors to lose Rs 6 lakh crore (US$131 billion) within seven trading sessions. The Finance Minister of India, P. Chidambaram, made an unscheduled press statement when trading was suspended to assure investors that nothing was wrong with the fundamentals of the economy, and advised retail investors to stay invested. When trading resumed after the reassurances of the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), the SENSEX managed to move up 700 points, still 450 points in the red. The SENSEX eventually recovered from the volatility, and on October 16, 2006, the SENSEX closed at an all-time high of 12,928.18 with an intra-day high of 12,953.76. This was a result of increased confidence in the economy and reports that India's manufacturing sector grew by 11.1% in August 2006.

13,000, October 30, 2006 - The SENSEX on October 30, 2006 crossed 13,000 and still riding high at the Bombay Stock Exchange for the first time. It took 135 days to reach 13,000 from 12,000. And 124 days to reach 13,000 from 12,500. On October 30, 2006 it touched a peak of 13,039.36 & closed at 13,024.26.

14,000, December 5, 2006 - The SENSEX on December 5, 2006 crossed 14,000 and touched a peak of 14028 at 9.58AM(IST) while opening for the day December 5, 2006.

15,000, July 6, 2007- The SENSEX on July 6, 2007 crossed another milestone and reached a magic figure of 15,000. it took almost 7 month and 1 day to touch such a historic miles

May 2009 On May 18, 2009, the SENSEX surged 2110.79 points from the previous closing of 12174.42 this leading to the suspension of trade for the whole day.This event created history in Dalal Street, by being the first ever time that trade had been suspended for an increase in value. This rally is primarily due to the victory of the UPA in the 15th General elections. Trading was open for that day only for 55 seconds. Initially 25 seconds and 30 seconds market reached upper freeze limit twice in that day itself. Effects of the Sub prime crisis in the U.S On Monday July 23, 2007, the SENSEX touched a new height of 15,733 points. On July 27, 2007 the SENSEX witnessed a huge correction because of selling by Foreign Institutional Investors (FIIs) and global cues to come back to 15,160 points by noon. Following global cues and heavy selling in the international markets, the BSE SENSEX fell by 615 points in a single day on Wednesday August 1, 2007.

16,000, September 19, 2007- The SENSEX (Sensitivity Index) on September 19, 2007 crossed the 16,000 mark and reached a historic peak of 16322 while closing. The bull hits because of the rate cut of 50 bit/s in the discount rate by the Fed chief

Ben Bernanke on September 26, 2007 crossed the 17,000 mark for the first time, creating a record for the second fastest 1000 point gain in just 5 trading sessions. It failed however to sustain the momentum and closed below 17000. The SENSEX closed above 17000 for the first time on the following day. Reliance group has been the main contributor in this bull run, contributing 256 points. This also helped Mukesh Ambani's net worth to grow to over $50 billion or Rs.2 trillion. It was also during this record bull run that the SENSEX for the first time zoomed ahead of the Nikkei of Japan.

18,000, October 9, 2007- The SENSEX crossed the 18k mark for the first time on October 9, 2007. The journey from 17k to 18k took just 8 trading sessions which is the third fastest 1000 point rise in the history of the SENSEX. The SENSEX closed at 18,280 at the end of day. This 788 point gain on October 9 was the second biggest single day absolute gains.

19,000, October 15, 2007- The SENSEX crossed the 19k mark for the first time on October 15, 2007. It took just 4 days to reach from 18k to 19k. This is the fastest 1000 points rally ever and also the 640 point rally was the second highest single day rally in absolute terms. This made it a record 3000 point rally in 17 trading sessions overall.

Therefore the US Subprime crisis has a great effect even on INDIA.gold cross the psychological barrier. Participatory notes issue On October 16, 2007, SEBI (Securities & Exchange Board of India) proposed curbs on participatory notes which accounted for roughly 50% of FII investment in 2007. SEBI was not happy with P-notes because it was not possible to know who owned the underlying securities, and hedge funds acting through P-notes might therefore cause volatility in the Indian markets.

However the proposals of SEBI were not clear and this led to a knee-jerk crash when the markets opened on the following day (October 17, 2007). Within a minute of opening trade, the SENSEX crashed by 1744 points or about 9% of its value - the biggest intra-day fall in Indian stock markets in absolute terms till then. This led to automatic suspension of trade for 1 hour. Finance Minister P. Chidambaram issued clarifications, in the meantime, that the government was not against FIIs and was not immediately banning PNs. After the market opened at 10:55 AM, the index staged a comeback and ended the day at 18715.82, down 336.04 from the last day's close. This was, however not the end of the volatility. The next day (October 18, 2007), the SENSEX tumbled by 717.43 points 3.83 per cent to 17998.39. The slide continued the next day when the SENSEX fell 438.41 points to settle at 17559.98 at the end of the week, after touching the lowest level of that week at 17226.18 during the day. After detailed clarifications from the SEBI chief M. Damodaran regarding the new rules, the market made a 879-point gain on October 23, thus signalling the end of the PN crisis.

20,000, October 29, 2007- The SENSEX crossed the 20k mark for the first time with a massive 734.5 point gain but closed below the 20k mark. It took 11 days to reach from 19k to 20k. The journey of the last 10,000 points was covered in just 869 sessions as against 7,297 sessions taken to touch the 10,000 mark from 1,000 levels. In 2007 alone, there were six 1,000-point rallies for the SENSEX.

January 2008 In the third week of January 2008, the SENSEX experienced huge falls along with other markets around the world. On January 21, 2008, the SENSEX saw its highest ever loss of 1,408 points at the end of the session. The SENSEX recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of a recession in the US. The next day, the BSE SENSEX index went into a free fall. The index hit the lower circuit breaker in barely a minute after the markets opened at 10 AM. Trading was suspended for

an hour. On reopening at 10.55 AM IST, the market saw its biggest intra-day fall when it hit a low of 15,332, down 2,273 points. However, after reassurance from the Finance Minister of India, the market bounced back to close at 16,730 with a loss of 875 points. Over the course of two days, the BSE SENSEX in India dropped from 19,013 on Monday morning to 16,730 by Tuesday evening or a two day fall of 13.9%.

9,975, October 17, 2008 - SENSEX crashes below the psychological 5 figure mark of 10K, following extremely negative global financial indications in US and other countries. Exactly one year back in October 2007, SENSEX had gone past the 20K mark.

8701.07, October 24, 2008 lost 10.96% of its value on the intra day trade, the 3rd highest loss for a one day period in its history

Major crashes since 2000 May 2006 On May 22, 2006, the SENSEX plunged by 1100 points during intra-day trading, leading to the suspension of trading for the first time since May 17, 2004. The volatility of the SENSEX had caused investors to lose Indian rupees 6 lakh crore ($131 billion) within seven trading sessions. The Finance Minister of India, P. Chidambaram, made an unscheduled press statement when trading was suspended to assure investors that nothing was wrong with the fundamentals of the economy, and advised retail investors to stay invested. When trading resumed after the reassurances of the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), the SENSEX managed to move up 700 points, still 450 points in the red. The SENSEX eventually recovered from the volatility, and on October 16, 2006, the SENSEX closed at an all-time high of 12,928.18 with an intra-day high of 12,953.76. This was a result of increased confidence in the economy and reports that India's manufacturing sector grew by 11.1% in August 2006.

Effects of the subprime crisis in the U.S. On July 23, 2007, the SENSEX touched a new high of 15,733 points. On July 27, 2007 the SENSEX witnessed a huge correction because of selling by Foreign Institutional Investors and global cues to come back to 15,160 points by noon. Following global cues and heavy selling in the international markets, the BSE SENSEX fell by 615 points in a single day on August 1, 2007. Participatory notes issue On October 16, 2007, SEBI (Securities & Exchange Board of India) proposed curbs on participatory notes which accounted for roughly 50% of FII investment in 2007. SEBI was not happy with P-notes because it was not possible to know who owned the underlying securities, and hedge funds acting through P-notes might therefore cause volatility in the Indian markets. However the proposals of SEBI were not clear and this led to a knee-jerk crash when the markets opened on the following day (October 17, 2007). Within a minute of opening trade, the SENSEX crashed by 1744 points or about 9% of its value - the biggest intra-day fall in Indian stock markets in absolute terms till then. This led to automatic suspension of trade for 1 hour. Finance Minister P. Chidambaram issued clarifications, in the meantime, that the government was not against FIIs and was not immediately banning PNs. After the market opened at 10:55 AM, the index staged a comeback and ended the day at 18715.82, down 336.04 from the last day's close. This was, however not the end of the volatility. The next day (October 18, 2007), the SENSEX tumbled by 717.43 points 3.83 per cent to 17998.39. The slide continued the next day when the SENSEX fell 438.41 points to settle at 17559.98 at the end of the week, after touching the lowest level of that week at 17226.18 during the day. After detailed clarifications from the SEBI chief M. Damodaran regarding the new rules, the market made a 879-point gain on October 23, thus signalling the end of the PN crisis.

January 2008 In the third week of January 2008, the SENSEX experienced huge falls along with other markets around the world. On January 21, 2008, the SENSEX saw its highest ever loss of 1,408 points at the end of the session. The SENSEX recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of a recession in the US. The next day, the BSE SENSEX index went into a free fall. The index hit the lower circuit breaker in barely a minute after the markets opened at 10 AM. Trading was suspended for an hour. On reopening at 10.55 AM IST, the market saw its biggest intra-day fall when it hit a low of 15,332, down 2,273 points. However, after reassurance from the Finance Minister of India, the market bounced back to close at 16,730 with a loss of 875 points. Over the course of two days, the BSE SENSEX in India dropped from 19,013 on Monday morning to 16,730 by Tuesday evening or a two day fall of 13.9%. SENSEX falls Some major single-day falls of the SENSEX have occurred on the following dates: 1. January 21, 2008 --- 1,408.35 points 2. Oct 24, 2008---1070.63 points 3. March 17, 2008 --- 951.03 points 4. July 6, 2009 --- 870 points 5. January 22, 2008 --- 857 points 6. February 11, 2008 --- 833.98 points 7. May 18, 2006 --- 826 points 8. October 10, 2008 --- 800.10 points 9. March 13, 2008 --- 770.63 points 10. December 17, 2007 --- 769.48 points 11. January 7, 2009 --- 749.05 points 12. March 31, 2007 --- 726.85 points

13. October 6, 2008 --- 724.62 points 14. October 17, 2007 --- 717.43 points 15. September 15, 2008 --- 710.00 points 16. September 22, 2011 --- 704.00 points 17. January 18, 2007 --- 687.82 points 18. November 21, 2007 --- 678.18 points 19. August 16, 2007 --- 642.70 points 20. August 17, 2009 --- 626.71 points 21. June 27, 2008 --- 600.00 points 22. February 24, 2011 --- 545.92 points 23. February 27, 2012 --- 477.82 points 24. November 16, 2010 --- 444.55 Points 25. February 4, 2011 --- 441.92 Points 26. November 12, 2010 --- 432 Points

TABLE SHOWING ANNUAL AVERAGES OF SHARE PRICE INDICES AND MARKET CAPITALISATION
(Amount in Rupees crore)

Year

BSE Sensex

BSE National

RBI Index

Market capitalization

(Base : 1978-79 =100) India 1 1979-80 1980-81 1981-82 1982-83 1983-84 13381 1984-85 24302 1985-86 27572 1986-87 35521 1987-88 51379 1988-89 1989-90 70521 2 122.32 138.87 207.91 221.51 238.33

(Base : 1983-84 = 100)

(Base : 1980-81 = 100)

BSE

All-

3 100.00

4 100.00 118.90 110.40 125.30

5 5421 9769 10219

6 6750 11635

266.19

116.01

136.00

20378

492.23

216.99

221.70

21636

567.39

256.85

230.60

25937

454.46

232.23

207.30

45519

613.66 729.49

307.84 384.84

247.50 359.40

54560 65206

1990-91 1049.53 110279 1991-92 1879.51 354106 1992-93 2895.67 228780 1993-94 2898.69 400077 1994-95 3974.91 473349 1995-96 3288.68 572257 1996-97 3469.24 488332

536.99

500.30

90836

916.63

776.20

323363

1321.04

1142.10

188146

1373.00

1051.30

368071

1899.53

1537.30

435481

1525.93

1189.60

526476

1554.64

1146.80

463915

1997-98 3812.86 589816 1998-99 3294.78 574064 1999-00 4658.63 2000-01 4269.69 2001-02 3331.95 2002-03 3206.29 2003-04 4492.19 2004-05 5740.52 2005-06 8278.55 2006-07 12277.33 2007-08 14420.53

1650.07

1060.10

560325

1457.07

976.40

545361

2278.16 2170.51 1587.70 1597.82 2315.70 3077.68 4380.71 6242.73 7398.24

912842 571553 612224 572198 1201207 1698428 3022191 3545041 4538005

Note : 1. Market capitalisation data are as at end-December up to 1987-88 and at endMarch from 1988-89 onwards. 2. Compilation of RBI index was discontinued by the Reserve Bank of India since 1999-2000. Similarly, the compilation of data on the All-India market capitalisation was discontinued by Bombay Stock Exchange Limited (BSE), since 1999-2000. Source : 1. Bombay Stock Exchange Limited (BSE). 2. Reserve Bank of India.

INFORMATION TECHNOLOGY SECTOR The Information technology industry in India has gained a brand identity as a knowledge economy due to its IT and ITES sector. The ITITES industry has two major components: IT Services and business process outsourcing (BPO). The growth in the service sector in India has been led by the ITITES sector, contributing substantially to increase in GDP, employment, and exports. The sector has increased its contribution to India's GDP from 1.2% in FY1998 to 7.1% in FY2011. According to NASSCOM, the IT BPO sector in India aggregated revenues of US$88.1 billion in FY2011, where export and domestic revenue stood at US$59 billion and US$29 billion respectively. The top seven cities that account for about 90% of this sectors exports are Bangalore, Chennai, Hyderabad, Mumbai, Pune, Delhi, Kolkata, Coimbatore and Kochi. Export dominate the ITITES industry, and constitute about 77% of the total industry revenue. Though the IT ITES sector is export driven, the domestic market is also significant with a robust revenue growth.[1] The industrys share of total Indian exports (merchandise plus services) increased from less than 4% in FY1998 to about 25% in FY2012. The "Big Three" Indian IT Services firm are Tata Consultancy Services, Infosys and Wipro. This sector has also led to employment generation. Direct employment in the IT services and BPO/ITES segment was 2.3 million in 2009-10 and is estimated to reach nearly 2.5 million by the end of financial year 2010-11. Indirect employment of over 8.3 million job opportunities is also expected to be generated due to the growth of this sector in 2010-11. Generally dominant player in the global outsourcing sector. However, the sector continues to face challenges of competitiveness in the globalized world, particularly from countries like China and Philippines. India's growing stature in the Information Age enabled it to form close ties with both the United States of America and the European Union. However, the recent global financial

crises has deeply impacted the Indian IT companies as well as global companies. As a result hiring has dropped sharply, and employees are looking at different sectors like the financial service, telecommunications, and manufacturing industries, which have been growing phenomenally over the last few years. India's IT Services industry was born in Mumbai in 1967 with the establishment of Tata Group in partnership with Burroughs. The first software export zone SEEPZ was set up here way back in 1973, the old avatar of the modern day IT park. More than 80 percent of the country's software exports happened out of SEEPZ, Mumbai in 80s. HISTORY The Indian Government acquired the EVS EM computers from the Soviet Union, which were used in large companies and research laboratories. In 1968 Tata Consultancy Services established in SEEPZ, Mumbai[4] by the Tata Groupwere the country's largest software producers during the 1960s. As an outcome of the various policies of Jawaharlal Nehru (office: 15 August 1947 27 May 1964) the economically beleaguered country was able to build a large scientific workforce, third in numbers only to that of the United States of America and the Soviet Union. On 18 August 1951 the minister of education Maulana Abul Kalam Azad, inaugurated the Indian Institute of Technology at Kharagpur in West Bengal. Possibly modeled after the Massachusetts Institute of Technology these institutions were conceived by a 22 member committee of scholars and entrepreneurs under the chairmanship of N. R. Sarkar. Relaxed immigration laws in the United States of America (1965) attracted a number of skilled Indian professionals aiming for research. By 1960 as many as 10,000 Indians were estimated to have settled in the US. By the 1980s a number of engineers from India were seeking employment in other countries. In response, the Indian companies realigned wages to retain their experienced staff. In the Encyclopedia of India, Kamdar (2006) reports on the role of Indian immigrants (1980 - early 1990s) in promoting technology-driven growth: The National Informatics Centre was established in March 1975. The inception of The Computer Maintenance Company (CMC) followed in October 1976. During 1977-1980 the

country's Information Technology companies Tata Infotech, Patni Computer Systems and Wipro had become visible. The 'microchip revolution' of the 1980s had convinced both Indira Gandhi and her successor Rajiv Gandhi that electronics and telecommunications were vital to India's growth and development. MTNL underwent technological improvements. During 1986-1987, the Indian government embarked upon the creation of three wide-area computer networking schemes: INDONET (intended to serve the IBM mainframes in India), NICNET (the network for India's National Informatics Centre), and the academic research oriented Education and Research Network (ERNET). POST LIBERALIZATION Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service in 1991, the 64 kbit/s leased line service in 1992, and commercial Internet access on a visible scale in 1992. Election results were displayed via National Informatics Centre's NICNET. The Indian economy underwent economic reforms in 1991, leading to a new era of globalization and international economic integration. Economic growth of over 6% annually was seen during 1993-2002. The economic reforms were driven in part by significant the internet usage in the country. The new administration under Atal Bihari Vajpayeewhich placed the development of Information Technology among its top five priorities formed the Indian National Task Force on Information Technology and Software Development. The New Telecommunications Policy, 1999 (NTP 1999) helped further liberalize India's telecommunications sector. The Information Technology Act 2000 created legal procedures for electronic transactions and e-commerce. Throughout the 1990s, another wave of Indian professionals entered the United States. The number of Indian Americans reached 1.7 million by 2000. This immigration consisted largely of highly educated technologically proficient workers. Within the United States, Indians fared well in science, engineering, and management. Graduates from the Indian Institutes of Technology (IIT) became known for their technical skills. The success of Information Technology in India not only had economic repercussions but also had far-

reaching political consequences. India's reputation both as a source and a destination for skilled workforce helped it improve its relations with a number of world economies. The relationship between economy and technologyvalued in the western worldfacilitated the growth of an entrepreneurial class of immigrant Indians, which further helped aid in promoting technology-driven growth. RECENT DEVELOPMENT The economic effect of the technologically inclined services sector in Indiaaccounting for 40% of the country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforceis summarized by Sharma (2006): Today, Bangalore is known as the Silicon Valley of India and contributes 33% of Indian IT Exports. India's second and third largest software companies are head-quartered in Bangalore, as are many of the global SEI-CMM Level 5 Companies. Mumbai too has its share of IT companies that are India's first and largest, like TCS and well established like Reliance, Patni, LnT Infotech, i-Flex, WNS, Shine, Naukri, Jobspert etc. are head-quartered in Mumbai. And these IT and dot com companies are ruling the roost of Mumbai's relatively high octane industry of Information Technology. Such is the growth in investment and outsourcing, it was revealed that Cap Gemini will soon have more staff in India than it does in its home market of France with 21,000 personnel+ in India. On 25 June 2002 India and the European Union agreed to bilateral cooperation in the field of science and technology. A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint research and development. India holds observer status at CERN while a joint India-EU Software Education and Development Center is due at Bangalore.

INDIA'S IT INDUSTRY (IN USD BN) Particulars IT Services - Exports - Domestic ITES-BPO - Exports Domestic Engineering services, FY 2004 10.4 7.3 3.1 3.4 3.1 0.3 2.9 FY 2005 13.5 10.0 3.5 5.2 4.6 0.6 3.9 FY 2006 17.8 13.13 4.5 7.2 6.3 0.9 5.3 FY 2007 23.5 18.0 5.5 9.5 8.4 1.1 6.5 FY 2008 31.0 23.1 7.9 12.5 10.9 1.6 8.6

R&D and Software products Exports - Domestic Hardware - Exports - Domestic Total IT industry (including hardware) 2.5 0.4 5.0 0.5 4.4 21.6 3.1 0.7 5.9 0.5 5.1 28.4 4.0 1.3 7.0 0.6 6.5 37.4 4.9 1.6 8.5 0.5 8.0 48.0 6.4 2.4 12.0 0.5 11.5 64.0

Major IT Hubs
RANKING CITY DESCRIPTION 1 Bangalore : Popularly known as the capital of the Silicon Valley of India is currently leading in Information Technology Industries in India. 2 Chennai It is the Second largest exporter of Software next to Bangalore. 3 Hyderabad Hyderabad called as Cyberabad, 4 Pune Pune, a major industrial point in India. It is also referred to as Education Hub of India. It was declared as Gamma-Global City recently. As one of the largest cities in India, and as a result of its many colleges and universities, Pune is emerging as a prominent location for IT and manufacturing companies to expand. 5 NCR The National Capital Region of India comprising Delhi, Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad are having ambitious projects and are trying to do every possible thing for this purpose.