Karnataka economy hit as IT, ITES face slowdown

Economic Survey report says service sector to grow at 8.9 pc

The IT and ITES sectors, driver of the Karnataka’s economy, is in all probability slipping into another slowdown phase in the current financial year.

According to the Economic Survey report for 2012-13, yet to be released by the State government, the service sector is most likely to register a disappointing 8.9 per cent growth against 10.6 per cent last year, and it may further slowdown the State’s economic growth. 

Due to sluggishness in the IT sector, drought hit agriculture and continued stagnation in the industry, the overall economy of the State is likely to grow at 5.9 per cent against 6.4 per cent in the previous year. The State government is likely to release the report before the presentation of 2013-14 budget scheduled on February 8. The State Planning, Programme Monitoring and Statistics Department has prepared the report based on the advance estimates.

The big blow to the State economy is expected to come from the service sector, which contributors about 55 per cent to the Gross State Domestic Product (GSDP). It is for the first time since 2008-09, the worst year of global economic slowdown, the service sector (IT and ITES) is estimated to register decline in its growth. The sector had recovered in 2010-11 and 2011-12 financial years after recording the slowest growth rate of 8.2 per cent in 2009-10.

Food production 

The drought-hit agriculture sector (primary sector) is estimated to grow at just 1.8 per cent against 2.4 per cent last year. And the foodgrain production is estimated to be 125 lakh tonnes against the target of 135 lakh tonnes. The State has been experiencing severe drought for almost two years now. As many as 157 of 176 taluks have been declared as drought-affected by the government.

The primary sector had registered the highest growth of 13.3 per cent in 2010-11, with the record foodgrain production of 145 lakh tones. But the sector recorded a negative growth in 2011-12 with only 2.9 per cent. 

The industry or the secondary sector is expected to remain almost stagnant with 2.4 per cent growth. The poor performance in the sector is largely due to overall economic slowdown, official sources said.

Institute of Social and Economic Change Director Prof R S Deshpande said the drought has done major damage to the agriculture sector. There will be decline in production of oilsseeds, pulses and cash crops this year. Still there will be reasonable growth due to increase in productivity. Overall, the State finances have been well maintained, he added.

Wipro unveils aerospace actuator plant in Bangalore

Wipro Infrastructure Engineering, the global hydraulics business of Wipro Ltd, on Tuesday unveiled an aerospace actuator manufacturing facility at the Devanahalli Special Economic Zone near Bangalore International Airport.

In the first phase, the plant, set up in a 7.2 acre campus with an initial investment of Rs 650 million, will have an initial capacity to produce 2,000 actuators a year, the company said.

The existing infrastructure allows for expansion of the capacity up to 8,000 actuators per annum.

Aerospace actuators have various applications in an aircraft, including landing gear, flight control systems, engines and utilities.

The facility was inaugurated earlier today by Wipro Chairman Azim Premji in the presence of Klaus Richter (Executive Vice President - Procurement Head EADS/Airbus), M N Vidyashankar (Principal Secretary - Commerce & Industry, Government of Karnataka), among others.

“Our vision is to build a significant presence in the aerospace and defence market, leveraging on our experience and competence in precision engineering and machining space. Going forward, we see significant opportunities from this business,” said Pratik Kumar, President, Wipro Infrastructure Engineering.

In May 2011, Wipro Infrastructure Engineering signed an agreement with Spanish company CESA (Compania Espanola de Sistemas Aeronauticos S.A.), a subsidiary of the global Aerospace and Defence Corporation, EADS, for the manufacture of precision engineering components.

The pact involves transfer of technology as well as manufacturing aerospace actuators and related precision engineering components by Wipro for CESA.

Wipro Infrastructure Engineering plans to double the initial investment over the next six years to expand capacity and add new product lines in precision manufactured components, the company said.

The unit will commence serial production in April.

EADS : Unit Cassidian Unveils First India-Made Defense Products

European Aeronautic Defence & Space Co.'s (EAD.FR) Cassidian unit Monday unveiled the first two defense products designed and developed by its research and development center at India's technology hub of Bangalore, two years after the facility was established.

The center, which has 60 Indian engineers, was set up as part of plans to make it a single source supplier of certain technologies for marketing by Cassidian worldwide, the company said.

The high accuracy air pressure measurement system is an on-board sensor that provides pilots with altitude readings, while the structurally integrated antenna is integrated into military aircraft to reduce drag and improve stealth, it said.

Cassidian's growing activity in India follow the company's November announcement that it wants to further strengthen its market presence in the Middle East, India,Brazil and the U.S., in addition to its traditional European sales markets in Germany, France, Spain and the U.K.

Cassidian India chief executive Peter Gutsmiedl said the Bangalore center, while increasing the company's industrial presence in India, allows the company to "customize global products to local requirements, especially in areas such as unmanned aerial vehicles, radar solutions and security systems."