Krishnakumar Natarajan: Tax regime should boost growth of smaller IT firms

Krishnakumar Natarajan
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Krishnakumar Natarajan
Krishnakumar Natarajan

The Indian IT Industry is looking ahead optimistically to build a $300-billion industry by 2020.

The short-term signals are positive and the demand scenario is looking far more positive than it was a year ago. But we need to be cautious as alternative locations are also emerging. It is critical that the Government sees both the economic and the social impact which the IT industry can create and accordingly provide the right enabling environment for the industry to thrive. In this context, the Budget 2013 becomes very crucial. My Top 5 expectations from the budget are:

Provide an incentive model to build products and intellectual property in India. We need to fast known as a nerve centre for innovation.

Sizeable investments in deploying technology in healthcare, education and governance. This will enhance quality of living and also stimulate domestic demand for IT-related services.

We must drive more inclusive growth. To ensure these, incentives must be given for IT industry to spread itself to Tier-2/Tier 3 cities.

The IT industry will grow and be innovative if smaller, nimbler companies are encouraged to grow and thrive. The current procedures and policy environment for small companies is stifling. A small entrepreneur has to deal with multiple taxes and 10 different departments. We need to make the operating environment friction-free for small entrepreneurs.

SEZ policy should do away with minimum, contiguous land etc. so that small and medium companies can also derive the benefits of SEZ.

There should be easy access to working capital for knowledge companies and the budget should articulate platforms for this.

(The author is CEO & Managing Director, MindTree Ltd.)

(This article was published on February 20, 2013)
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Economic Survey 2014-15 highlights

  • Following are the highlights of Economic Survey 2014-15 presented by Finance Minister Arun Jaitley in Parliament today
  • GDP growth seen at 8.1–8.5 per cent in 2015-16
  • Double digit growth trajectory; 8–10 per cent GDP in coming years
  • Inflation shows declining trend during April-December
  • Current Account Deficit (CAD) to decline to about 1 per cent in 2015-16
  • To adhere to fiscal deficit target of 4.1 per cent of GDP; to aim for 3 per cent
  • Committed to fiscal consolidation; to enhance revenue generation
  • More reforms on anvil; Goods and Services Tax, expanding direct benefit transfers to be game-changers
  • Foodgrains production for 2014-15 estimated at 257.07 million tonnes; will exceed last 5-year average by 8.5 million tonnes
  • NITI Aayog, 14th Finance Commission to enhance fiscal federalism
  • External Sector returning to strength, resilience
  • Need balance between ‘Make in India’ and ‘Skilling India’
  • Services sector negotiations at WTO crucial for India in removing many market access barriers
  • Revitalise PPP model to revive investment
  • Manufacturing and services equally important for growth
  • Consumer inflation in 2015-16 to be between 5-5.5%
  • Lower inflation opens up space for more monetary easing
  • There is scope for big bang reforms
  • Labour, capital, land, market reform and skills to be engines of growth
  • JAM Trinity — Jan Dhan Yojana, Aadhaar, Mobile — to help transfer of funds to poor without leakage
  • Shield domestic industry to promote ‘Make In India’
  • Borrowings to fund investment, not for meeting expenses
  • Food subsidy bill in April-Jan up 20% to Rs 1.08 lakh cr
  • Reform Railway’s structure, commercial practices, overhaul of technology
  • Public investment key growth engine in short-run for Railways, but not a substitute for private investment
  • More disinvestments on the anvil in current fiscal
  • Under-recoveries on petroleum products to come down to Rs 74,664 crore in 2014-15, from Rs 1.39 lakh crore in FY14
  • 4Ds — Deregulation, Differentiation, Diversification, Disinter (better bankruptcy laws) — to push financial sector growth
  • Implementation of GST to boost GDP, exports
  • Suggests medium to long term fiscal policy to target deficit, expenditure
  • Global commodity prices to remain weak in 2015
  • Ecommerce sector to witness 50% growth in 5 years
  • The Swift DZire gets a facelift and a bump up in efficiency »

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