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Mr Lakshmi Narayanan

Our Bureau

Chennai, Oct 10 India is unlikely to dominate the global information technology market, unless the Government extends concessions and structures clear taxation policies governing the industry for the next three-five years. Until then Indian IT companies will not be able to bargain for better pricing of deals to tackle the rupee appreciation and protect their margins, according to Mr Lakshmi Narayanan, Chairman, Nasscom.

“In the last six months tens of millions of dollars of investment has bypassed India into countries in Eastern Europe, Asia Pacific region and particularly China,” he told Business Line, on the sidelines of a meeting organised by the Rotary Club of Madras. Mr Narayanan attributed this to the current rupee-dollar exchange rate and uncertainty in tax laws governing the IT sector in India.

He said China had set aside vast stretches of land for companies to start operations without paying any land leasing costs for five years. When asked if subsidies were a solution to retain India’s competitiveness, he said “No. But if the competition does it, so must we.”

Earlier on Tuesday, he addressed members of the Rotary Club of Madras on the need to innovate for sustained growth. He said companies must accept that the rupee was likely to appreciate further in future and make long term plans for maintaining margins. IT was not the only industry affected by rupee appreciation and that a cascading effect was now being felt by the construction industry too, he said.

Innovation could minimise effects of economic change on businesses, he said, quoting a joint study undertaken by the Boston Consulting Group. According to the study if India could export $60 billion (about Rs 2.4 lakh crore) worth of software services over the next three-four years, then through innovation we could generate $50 billion more in revenues.

More Stories on : Industry Associations | Tamil Nadu

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