Give tax sops, log off slump

ExtenD STPI sops, Amend I-T Act.

The information technology sector, one of the industries to have put India on the global map, is hoping that with a clear winner and no involvement of Left parties, the new government will be in a better position to improve matters in a slowing economy.

The sector wants action on many issues. One is extension of Software Technology Parks of India (STPI) benefits, which will allow mid-size firms to maintain their operating margins in the current recession. IT firms have been hit, since almost 80 per cent of their revenues comes from exports to the US and UK, both of which face slowdown. If the IT firms — especially small- and mid-size ones — have to pay taxes in India, their profits would take a further hit and many of them would have to close, fears the industry body, Nasscom.

Other demands include removal of inequities and the multiplicity of taxes (Service tax, FBT) and an overall policy environment to enhance India’s competitiveness and attract foreign investment. Along with a greater investment in e-governance, building a more robust digital network and taking low-cost computing to rural India.

Welcoming the election results, Nasscom said: “We look forward to working with the government to promote inclusive growth and social benefits through the innovative use of IT. We hope specific policy initiatives are taken to sustain industry’s growth through extension of tax benefits, particularly for SMEs, removal of inequities and multiplicity of taxes and developing public-private partnerships to accelerate implementation of the already-approved e-governance programmes.”

Vinnie Mehta, executive director of Manufacturers Association for Information Technology ( MAIT), said: “The new government must use IT for economic thrust and harness IT in the true sense to make all verticals of the economy more efficient. The issue of connectivity — both wired and wireline — needs to be addressed by making the Internet more robust.” Mehta also emphasised the need for e-governance initiatives to go beyond the Mission Mode Projects.

Says former Nasscom head Kiran Karnik, now chairman of Satyam Computers’ board of directors: “As policy indicators, the government should take on the protectionist stand that some countries are taking. Look into the education sector. Though there have been positive initiatives, these are not enough. And most important, the government should focus on human resource issues, for the long-term growth of the knowledge industry.” The industry employees over two million people.

Nasscom also wants the government to increase IT budgets to stimulate the IT-BPO industry and the economy. It wants the states to initiate a time-bound program for extending broadband connections to all villages (as mentioned in the Congress manifesto), so as to provide Internet access to all citizens; and back this with steps to increase computer penetration.