Robust demand drives IT exports to US$ 224 billion in FY25

India’s information technology (IT) sector, a key pillar of the nation’s economy, achieved a remarkable milestone in fiscal year 2024-25 (FY25). The Ministry of Electronics and Information Technology (MeitY) reported a 12.48% surge in IT exports, reaching US$ 224.4 billion from US$ 199.5 billion in FY24. This robust growth, a significant leap from the previous year’s 2.83% increase, highlights the sector’s resilience amid global economic challenges. The Software Technology Park of India (STPI) scheme has been instrumental in this success, expanding beyond metro cities to drive job creation and innovation in tier-2 and tier-3 regions. This article examines the drivers of this growth, the impact of government policies, and India’s strengthened position in the global IT landscape.

Despite global headwinds such as trade wars and post-pandemic economic uncertainties, India’s IT exports have maintained a consistent growth trajectory over the past five years. Growth rates have fluctuated, from 3.4% in FY21 to a high of 17.01% in FY22, followed by 8.98% in FY23 and a dip to 2.83% in FY24. The 12.48% surge in FY25 reflects a strong recovery and growing global demand for Indian IT services. According to Nasscom’s Technology Sector Strategic Review 2025, the industry is projected to generate US$ 283 billion in revenue for FY25, marking a 5.1% year-on-year growth, driven by demand from the United States, a recovering banking, financial services, and insurance (BFSI) sector, and expansion in telecom, retail, and healthcare. This resilience highlights India’s position as a global IT outsourcing hub, with nearly 90% of Fortune 500 companies relying on Indian tech firms.

The STPI scheme: Catalyzing growth beyond metros

A key driver of this export boom is the STPI scheme, which has played a pivotal role in expanding India’s IT infrastructure. In FY25, STPI-registered units recorded exports worth Rs 10.64 lakh crore (US$ 224.4 billion), a testament to the scheme’s effectiveness. Originally focused on major cities, the STPI has strategically shifted its focus to tier-2 and tier-3 cities, with 60 of its 68 centers now located in non-metro areas. This decentralization has not only broadened the sector’s geographical footprint but also created significant employment opportunities. As of March 31, 2025, STPI units employed 298,000 people in non-metro cities, contributing to economic development in regions such as Bhagalpur, Darbhanga, Jajpur, Koraput, and Kohima.

The STPI scheme has also fostered innovation through the establishment of Centers of Entrepreneurship (CoEs). In FY25, 15 new CoEs were set up, bringing the total to 24. These centers have supported 1,121 startups, with a total outlay of Rs 445.77 crore, including Rs 39.86 crore in direct funding to 590 startups over the past three years. These initiatives have created 9,800 jobs in non-metro areas, empowering local talent and driving entrepreneurial growth. The government’s focus on building incubation centers in smaller cities has democratized access to resources, enabling startups to contribute to India’s IT export ecosystem.

Broader economic impact and sectoral synergies

The IT sector’s growth is part of a broader transformation in India’s export profile. In FY25, India’s total exports reached a record US$ 824.9 billion, with services exports, including IT, surging 13.6% to US$ 387.5 billion. This growth was fueled by sustained investments in digital infrastructure, such as data centers and high-speed internet, which have enhanced India’s ability to deliver world-class IT services. The IT sector’s success has also complemented growth in other high-tech and value-added sectors, such as electronics, engineering, and pharmaceuticals, which collectively accounted for over 50% of India’s exports in FY25. For instance, electronics exports grew by 32.46%, driven by policies like the Production-Linked Incentive (PLI) scheme, which has also boosted smartphone exports to $20 billion in FY25.

While the IT sector’s achievements are commendable, challenges remain. Global trade barriers, fluctuating demand in key markets like Europe, and the need for continuous innovation in areas like artificial intelligence (AI) pose risks. Some observers highlight the sector’s reliance on low-cost labor rather than innovation, though others celebrate its role in creating an upwardly mobile class and attracting foreign direct investment. To sustain its growth, India must invest in upskilling its workforce, particularly in emerging technologies like generative AI, which presents both opportunities and competitive pressures.

Looking ahead, the IT sector is poised to play a central role in achieving India’s ambitious target of $1 trillion in exports by FY26. The Federation of Indian Export Organisations (FIEO) attributes this potential to global diversification and new free trade agreements. With government support, a focus on non-metro growth, and a commitment to innovation, India’s IT sector is well-positioned to maintain its status as a global leader.