IT ministry moots extension of STPI benefits till 2015

The Union IT ministry is keen on extending the tax benefits to the Software Technologies Parks of India (STPI) by another five years till 2015, and is in talks with the finance ministry.

Jainder Singh, Union IT secretary, said, “We have already taken up the matter with the finance ministry as we believe that the extension is important for the IT units, especially the small and medium exterprises.”

The Interim Budget announced this month did not spell out any relief for the export-oriented Indian IT industry, where the tax exemptions available under the STPI scheme were slated to come to an end in March 2010.  The income tax benefits under section 10-A and 10-B were extended till 2010 in last year’s Union budget from the earlier scheduled 2009.

Talking on the sidelines of ‘Indiasoft 2009’, organised by the Electronics and Computer Software Promotion Council (ESC), Singh added that the workforce in the information technology sector was expected to increase to 2.23 million from the current two million as the employee strength was expected to rise by 15 per cent in 2009-10.

Singh, however, also admitted that the growth in software export might decline to 17 per cent this fiscal from the last year’s 28 per cent growth. “The software export book is expected to stand at $ 47 billion from $ 40.4 billion last fiscal. Nearly 95 per cent of the total software exports from the country comes from STPI units,” he informed. The STPI scheme was originally set up to promote software exports from the country.

Meanwhile, West Bengal chief minister, Buddhadeb Bhattacharjee, also said that while the state had registered a 46 per cent growth in the IT sector in comparison to the national average of 29 per cent in 2007-08, it would be difficult to maintain a similar growth rate this fiscal.

However, state IT minister Debesh Das was still confident about securing a higher than national average figure. "West Bengal has managed to attract around 35 to 40 IT companies to the state per year. In all 33 companies set up shop here last year. The number would not be lower this fiscal", Das said.

India lagged in hardware exports, as ESC data showed that the country's total electronics hardware production estimated at $20 billion during 2007-08 accounted for a share of only 1.24 per cent in the world electronic equipment production.