India's small and medium-sized businesses are projected to spend US$8 billion on IT-related investments this year, a 23 percent increase over 2006.

According to the latest study by research firm AMI-Partners, the top sectors driving Indian SMB spending are banking and financial services, insurance, real estate and professional services. The collective spending of these verticals is estimated to grow by 25 percent over last year.

The study also identified manufacturing, which includes discrete manufacturing, life sciences, pharmaceuticals and process manufacturing, as a key vertical investing in IT. The sector's IT spending is projected to top US$2.9 billion, or account for 36 percent of India's total SMB IT spend this year.

An "IT revolution amongst Indian SMBs" is taking place, noted Dipendra Mitra, an AMI-Partners analyst, in a statement on Monday.

"On one hand are small businesses with up to 99 employees, which are aggressively investing in basic computing infrastructure. On the other hand are medium-sized businesses employing 100 to 999 employees, which are looking at boosting IT infrastructure for increased revenue growth and customer convenience," said Mitra.

According to the study, Indian SMBs plan to invest in basic PC infrastructure this year to beef up their business management capabilities, as well as communications and networking systems. IT security is also a key area for investment.

AMI-Partners noted a corresponding increase in security threats related to viruses and spam as more SMBs in India use the Internet to expand their business. Financial, manufacturing and professional services account for more than 80 percent of the security spending, the study found.

Indian SMBs are said to have spent nearly US$160 million over the last 12 months on security-related products and services such as antivirus and anti-spam software, intrusion detection programs, and firewalls.