The Hindu Business Line : Services, software seen growing at 28%

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Mumbai Jan. 23 Revenues from the Indian IT-ITES sector (including the domestic and export segments) are expected to increase by nearly 28 per cent to exceed $47.8 billion (Rs 2,15,100 crore) in the current fiscalfrom $37.4 billion (Rs 1,68,300 crore) in 2006, industry body Nasscom has said.

Its report — `Nasscom Strategic Review 2007,' — said that services and software exports will continue to be the mainstay of the sector contributing $31.3 billion (Rs 1,40,850 crore) to register a 32.6 per cent growth from $23.6 billion (Rs 1,06,200 crore).

"We are well on track to achieve our target of $60 billion (Rs 2,70,000 crore) in IT/BPO exports by 2010," said Mr B. Ramalinga Raju, founder and Chairman of Satyam Computer Services and Chairman, Nasscom, at a news conference on Tuesday.

The contribution of the IT industry to the GDP has gone up to 5.4 per cent from 4.8 per cent last year, said the report.

Indian service providers have grown their share of high-value contracts; their share of contracts of value of $50 million (Rs 225 crore) and above has risen from 1 per cent in 2002 to 7 per cent in 2006, the report said.

The high offshore delivery component and superior execution in multi-location delivery continue to be key differentiators, said Mr Kiran Karnik, President, Nasscom.

The Indian IT-BPO sector is growing at an estimated 28 per cent this current fiscal; the total revenue aggregate for the sector is expected to exceed $47.8 billion (Rs 2,15,100 crore), said Nasscom.

Increasing traction in offshore product development and engineering services is supplementing India's efforts at intellectual property creation; this segment is growing at 22-23 per cent and is expected to reach $4.9 billion (Rs 22,050 crore) in exports.

MNC investments of over $10 billion (Rs 45,000 crore) have been announced in 2006-2007, reaching an "unprecedented scale", said a statement from Nasscom. The investments will happen over the next few years, it said.

The total size of the domestic market is expected to cross $15.9 billion (Rs 7,15,100 crore) in financial 2006-07, growing 21 per cent over 2005-06.

`Extend tax holiday for STPIs'

Mr Karnik believes that the Government should extend the tax holiday for units under the Software Technology Parks of India (STPI) scheme for another 10 years.

"If the scheme is not extended, India will lose sizeable increments in investments to countries like China, the Philippines and several East European nations which have a favourable tax regimes," said Mr Karnik.

At present, the units located under the STPI scheme anywhere in the country 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 as well as on imports of equipment on a loan or lease basis.

If the extension does not happen, companies will be forced to move into SEZs for gaining tax benefits, which is not feasible, according to Mr Raju. "Even established companies would be forced to underutilise their assets, which would be a national waste," added Mr Raju.

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Services, software seen growing at 28%

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