The Hindu Business Line : ‘Tax sops will help offset Re impact’

Bangalore Aug. 6 Stung by the rupee appreciation and wage inflation, the ITES-BPO industry made a strong pitch for the continuation of tax concessions under the Software Technology Parks of India (STPI) scheme beyond 2009.

Speaking at the inaugural of annual ITES-BPO Strategy Summit on Monday, the Nasscom President, Mr Kiran Karnik, said extension of tax incentives would help the industry to partially offset losses being caused by the appreciating rupee.

The rupee has appreciated by 8-9 per cent within three to four months.

“We have lived through it, but this is not good for the growth of the industry,” Mr Karnik said, adding that Nasscom has been engaged in a dialogue with the Government for some kind of intervention.

The rupee appreciation in the long term will not only impact the bottom lines, but also erode the country’s competitiveness.

“The competitiveness of our industry will be impacted compared to other countries, which are holding their currency steady against the US dollar,” he added.

Besides, the industry faced challenges such as “Moving up the value chain by tapping newer areas and broadening that base in addition to finding, recruiting and retaining the workforce in the industry,” he said.

Support for bpo sector

Stressing upon the fact that ITES-BPO industry was in early stages and required more support compared to the IT industry, the Chairperson of Nasscom ITES-BPO Forum, Mr Pramod Bhasin, predicted that BPO would emerge as the largest private sector employer in India over the next few years.

“Unfortunately, the BPO sector gets swallowed under the IT industry, but it should not. The BPO sector is just 5-7 years old whereas the IT industry has been here for the last 25 years. There will be more employment opportunities created by the BPO sector, which needs to be nurtured,” he added.

Further contending that SEZs were no replacement for the STPI scheme, Mr Bhasin said more than SEZs, the BPO industry needs the reachability.

BPOs in Tier-I and Tier-II cities have changed the entire face of the city as well as employment opportunities and hence this sector needed to be encouraged, he added.

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