BUDGET WISHLIST: IT sector BS Reporter / New Delhi February 06, 2007
| CEOSPEAK: Krishan Dhawan Oracle India |
| “For India to attain its vision of becoming a developed nation by 2020, the government needs to encourage the use of IT ” |
| Chamber Speak |
| Ficci In the last Budget, 8 per cent excise was levied on packaged software sold over the counter. This has led to an increase in piracy of software, which at 74 per cent is already among the highest in India, compared with 53 per cent in the Asia-Pacific region and 35 per cent globally. |
| The levy of this excise duty will send negative signals about India being the most favoured destination for IT and IT-related activities. FICCI has recommended that the government drop the levy. |
| Assocham IT and IT-enabled services (ITeS) industry contributes 5 per cent to GDP. If this has to increase to the projected 8 per cent of GDP by 2010 and to 12 per cent by 2015, the IT sector should be given a complete tax holiday for a minimum of 15 years. |
| The government can, however, levy state-level taxes like octroi and mandi tax at a minimum rate of 3-4 per cent. |
| The government should also approve a good number of IT parks in special economic zones (SEZs) and should not cap the number of SEZs. |
| EXPERTSPEAK: Ambarish Dasgupta |
| Focus on domestic IT market |
| Indian IT and IT-enabled services industry has been witnessing an export boom over the last few years. IT services exports are projected to grow at a healthy 30 per cent. We feel this Budget needs to focus on the domestic IT market in terms of increasing the profitability of service providers as well as giving incentive to industry for investing in IT. |
| E-governance should be another thrust area. In this, fund allocation across different departments like health, municipality, education, transport and the subsequent monitoring of those funds through third-party sources would help the true benefits reach the citizens. |
| Skill development and infrastructure are two other areas which would need careful planning for them to contribute to the growth of the domestic IT business. |
| Education spends need to be increased to finance higher education for underprivileged students. Also, faculty and R&D quality of engineering and business schools would need support from the government and a central fund for the same could be created. Corporate contribution to such a fund can be encouraged through tax benefits as well. |
| Finally, India is also witnessing a lot of incoming foreign direct investment in the IT and ITeS sector. We want a careful analysis of the benefits of export obligation requirements on incoming FDI for increasing exports apart from the tax benefits being offered at present. |
| India’s infrastructure has not kept pace with the explosive growth of IT. Funds from taxes like FBT should be used for infrastructure growth and urban renewal and to provide incentives to organisations for creation of such facilities. |
| There has been a lot of inorganic growth in the IT industry over the last year and large Indian IT companies have a lot of financial leverage. India needs to carefully look at merger and takeover norms so that large IT service providers can acquire smaller firms across the globe if there are synergistic gains to be realised. |
| The author is executive director, PricewaterhouseCoopers |
