The Hindu Business Line : HCL Tech chief wants I-T tax breaks beyond 2009<br> `If something works fine, you should not tamper with it'

The Software Technology Parks of India (STPI) has urged the Government to give companies registered under the STPI to be treated on par with those registered under the Special Economic Zones. If this were implemented, it would give companies, under STPI, tax breaks beyond 2009.

At present, the units located under the STP scheme enjoy sops, including income-tax holiday as per section 10A of the Income-Tax Act; 100 per cent customs duty exemption on imports of capital equipment; and import of equipment on a loan or lease basis.

Among the other benefits are the imports of all relevant equipment/goods (including second-hand equipment, except prohibited items); 100 per cent excise duty exemption on indigenous items procurement; and sales in the Domestic Tariff Area up to 50 per cent of the foreign exchange earned by the unit.

RIPPLE EFFECT ON JOBS

Asked to comment, Mr Nadar said, "If something works fine, you should not tamper with it. For the industry as a whole, I would welcome tax exemptions going beyond 2009." According to him, the ability of the IT industry to absorb a tax burden is not the issue.

"It probably would (be able to absorb the burden). But, it should be encouraged (with tax exemptions) since it generates so much direct employment and the ripple effect reaches other sectors in the economy." According to him, for every employee in the IT software industry, six more jobs are created to service it elsewhere. He said, "Spending on housing, automobiles and retail go up with disposable incomes increasing."

PACT WITH CISCO

Mr Nadar was in Chennai to mark the tenth year anniversary of HCL's relationship with the global networking major Cisco Systems. It also announced a royalty-based revenue model with Cisco.

Under this model, Cisco has licensed HCL with the Intellectual Property (IP) for one of its network management products. With this, HCL Technologies becomes completely responsible for the engineering of the product.

The company started out with 30 employees in 1996 when the relationship with Cisco began. The headcount has now crossed 1,100.

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