Karnik hints at slowdown in IT exports in 4 yrs

Nasscom President Kiran Karnik today hinted at a possible slowdown in the momentum of India's Information Technology (IT) exports after 2010,due to the recent tax impositions on the sector.

"We will meet our current export targets but there might be a slowdown after that," Karnik told reporters on the sidelines of a panel discussion organised by Executive Recruiters Association here on Thursday.

According to a recent study commissioned by Nasscom, India's IT-ITeS exports are expected to cross $31 billion in the current calendar year and is expected to exceed $60 billion by 2010. According to the recent Budget, IT industries have been brought under the Minimum Alternative Tax (MAT) bracket.

Employee Stock Option Plans, very popular with IT companies, have been brought under the purview of fringe benefit tax. "ESOPs are a means of attracting and retaining talent in the IT industry. The move to tax them will definitely affect the smaller companies," he said.

In a statement issued by Nasscom post-Budget, Karnik had said that they were "dismayed" at the proposal to extend MAT on export incomes, which were exempt under Sections 10A and 10B.

He added this move could "affect investor confidence and growth in this sector which is not only India's biggest exporter ($31.6 billion in 2006-07) but is the biggest employer in the organised private sector." On the issue of the recent DoT order to close down 'illegal' BPOs and call centres, Karnik said the issue pertained only to the unregistered call centres but exhorted the government to give them more time.

"We will take up the issue informally with the government," he told the media.