Nasscom draws agenda for IT industry

While some in Indian information technology (IT) services have been saying the sector does not need any more tax incentives, Nasscom president R Chandrashekhar says intervention in policy support is a must.

“It is not one monolithic industry,” he said.

Since he took over as president earlier this year, Chandrashekhar has been busy putting together a set of recommendations to be taken to the government, to come to power in a few months.

“The areas include the creation of an environment conducive to start-ups and product companies, need for a change in the regulatory regime, increasing the global footprint, and promotion of the digital economy.”

THE VISION

MAJOR THEMES

• Creating ecosystem for start-ups and product firms
• Conducive regulatory regime
• Increasing global footprint
• Acceleration of digital economy

POLICY FOCUS

• Single-window clearance
• Distinction between sectors
• Taxation of start-ups
• Make it easy for start-ups to create, scale and close
• Govt procurement policy needs to recognise small firms

For Chandrashekhar, addressing the needs of start-ups is crucial. “The sector is not just about services. Creating value is also crucial.”

Chandrashekhar said there was an alarming trend where a lot of entrepreneurs were Indian and activities of these companies were in India, but a majority were registered in Singapore and the value was being in that country. “We have a lot of policy issues to be fix. Issues like how companies get started here, taxation issues, investment provision, how this is compared to other countries, and how the regulatory framework doesn’t discourage the entrepreneurial set-up.”

He said there was a need to create an entrepreneurship mission, which will make creating business in India easy. “At the policy level, the government should recognise the distinction between sectors. There was a programme provided by the government called a ‘virtual single window’. There would be a single window for all clearances. For a sector like this, you can have fast-track system. This is a sector that can operate even from a house. So a lot of regulatory compliance does not apply but the way the system works, you need to comply.”

According to Chandrashekhar, the policy should address how easy it is to start a company and to continue to operate it, and since failure is a part of a start-up environment, how easy it is to fold the company. “If you look at the regulatory regime under the Companies Act, the compliance requirement makes no distinction between a Rs 100,000-crore company and a Rs 100 crore one.”

The agenda will also look at how start-ups are treated with regard to funding. Since most have no physical assets, banks are not willing to fund these. This means one needs an environment where risk-takers, angels, seed fund, venture capital, are equally welcomed. He added the government had a role to play in reducing the cost overhangs.

“Indian IT has not changed the way governance is delivered or how education is delivered in remote areas. Technology’s role has been very limited,” he added.

He points out the agenda also seeks to address how the government procures IT. “GoI has strict parameters like size of the company, revenue etc, when it comes to procurement. But they never ask the question, if that company can do what is being asked from them,” he added.

As part of the agenda, Nasscom is also identifying sectors wherein they can work with the government and the private sector. The first such sector identified is healthcare.

Nasscom has signed a memorandum of understanding with Healthcare Federation of India . “We are also looking at other sectors and based on priority we will take sectors. Some of the sectors include agriculture, logistics, manufacturing, governance etc,” he said.