The Hindu Business Line : Raja pitches for three-year extension of STPI tax sops

New Delhi, Nov. 25 The Minister for IT and Communications, Mr A. Raja, said on Tuesday that he would soon approach the Prime Minister to seek an extension of tax exemptions available under the STPI (Software Technology Park of India) scheme, for three more years beyond the stipulated timeline of March 2010.

“It (the scheme) has already got extended by one year. This year I will again take up the matter with the Prime Minister. I will seek at least three years of extension beyond March 2010,” Mr Raja said on the sidelines of Economic Editors’ Conference 2008.

Offering relief to the IT and BPO industry, particularly smaller companies, the Centre earlier this year had extended tax sops under STPI scheme by one year to March 31, 2010. The STPI clause, which was originally slated to lapse on March 31, 2009, would have hit the earnings of companies the following year, by raising the tax outgo. In effect, the one-year extension has given a breather to IT companies that would have otherwise been hit harder given the downturn in the US.

Healthy growth

Alluding to the meltdown in the global markets, Mr Raja said that despite the “turbulence”, the IT sector in India continued to maintain a healthy growth rate in software and IT enabled services as well as in electronics hardware sectors.

“As a result of the various measures taken by the Government, as well as stepped-up investment by Government in e-Governance, the IT and electronics hardware and software and services sectors are expected to continue to grow at a rate of over 20 per cent per annum,” he pointed out.

The Minister further said the Special Incentive Package Scheme (SIPS) to encourage investments in semiconductor fabrication and other micro and nano technology manufacturing industries in India had attracted 17 proposals with cumulative investments worth Rs 1,55,000 crore, to date. He said FDI in the electronics hardware sector in the last one year (May 2007 and July 2008) was $183 million, as against the cumulative FDI of $160 million during the three-year period from May 2004 to April 2007.

In the case of software sector, FDI during May 2007 to July 2008 has been $2,400 million. “With this growth in IT sector, the IT industry is expected to continue to employ professionals at a similar incremental rate,” he said.

The Minister said the Cabinet had recently approved proposed amendments under the Information Technology Act 2000, and the same would be introduced in Parliament shortly.

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