Delayed payments by govt a concern: Nasscom

Government may come out with some package of measure for start-ups by the first week of December

Nasscom has expressed concern at the fact that the government hasn’t taken any action to address the delay in contract payments to Indian information technology (IT) services firms. “We have shared this list with the government, we have written to the finance ministry and to the IT ministry, too. But we have not seen any movement and it is a matter of huge concern,” said Nasscom President R Chandrashekhar said on the sidelines of the association’s engineering summit.

Various government departments owe about Rs 5,000 crore in contract payments to IT services companies.

Large contracts implemented by IT firms include digitisation of passport services, implementation of Aadhaar and the modernisation of India Post.

With the delay in payments hitting the margins and revenue of Indian IT companies, the likes of Tata Consultancy Services (TCS), Infosys and Wipro have now gone slow in bidding for various government contracts.

Chandrashekhar also expressed concern at the fact that the European Court of Justice had recently struck down an international agreement allowing firms to move data between the European Union and the US.

The order will have impact on Indian firms working for several companies across the two regions.

“It is a concern. We have taken up the issue during a discussion with the visiting German delegation. We have said it is a road block. It’s going to be an EU decision and we are hoping Germany wouldn’t support this legislation,” Chandrashekhar said. He, however, added he was positive on the government’s activity and intent in creating an environment conducive to the growth of start-ups. Prime Minister Narendra Modi’s recent visit to Silicon Valley would boost such efforts, he said.

“The biggest positive is the discussions we were having with the government on regulations for the start-up ecosystem are now reaching a culmination. We have been told by the first week of December, a package of measures will be announced,” said Chandrashekhar.

Nasscom, along with iSPIRT and various other stakeholders, has been in talks with the government to come out with regulatory norms to boost the start-up ecosystem in India. Some of these issues relate to bankruptcy laws and taxation.

“Some of the drafts have been shared with us; what matters are the details. One of the biggest concerns is the fact that start-ups, when they hit the first success milestone, want to get out of the country to set up their office. One of the biggest reasons for this is taxation. We need more clarity and an environment conducive to start-ups,” Chandrashekhar said.

Nasscom has been spearheading the 10,000 start-up initiative, through which it wants to scale up start-ups in India. The initiative, in its third year now, has seen 500-600 start-ups using the platform.