The IT sector is an economic concept and industry type, encompassing businesses that deal with software, hardware, information technology services, and IT-enabled services like Business Process Management (BPM). It is a vital part of the Indian economy, contributing about 7-9% of the country's GDP. The sector's origin in India can be traced to the 1960s with the Bhabha Committee's 10-year plan (1966–1975) for electronics. The industry was born in Mumbai in 1967 with the establishment of Tata Consultancy Services (TCS), which began exporting IT services in 1977 by partnering with Burroughs. The first software export zone, SEEPZ, was established in Mumbai in 1973, solving the problem of high import tariffs on hardware and hostile government policies toward private enterprise.
The sector's legal framework is primarily governed by the Information Technology Act, 2000 (IT Act), an Act of the Indian Parliament notified on October 17, 2000. The IT Act provides a legal framework for electronic commerce and governance by granting legal recognition to electronic records and digital signatures. It works by defining and penalizing cybercrimes like hacking and identity theft under sections such as Section 66 and Section 66C. The Act also provides legal validity to electronic contracts under Section 10A and safeguards for intermediaries under Section 79.
The IT Act connects to other legislation, having amended the Indian Penal Code, 1860, the Indian Evidence Act, 1872, and the Reserve Bank of India Act, 1934. It was significantly amended by the Information Technology Amendment Act, 2008, which introduced stringent provisions for cyber terrorism under Section 66F and replaced digital signatures with electronic signatures. More recently, the Digital Personal Data Protection Act, 2023, was passed to protect individual privacy and data. Furthermore, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2026, introduced India's first statutory regulatory framework for AI-generated and synthetic digital content, mandating labeling and a three-hour takedown compliance rule for harmful content.