The Kerala Chief Minister, Mr Oommen Chandy, has requested the Prime Minister to restore the Software Technology Parks of India (STPI) scheme for reviving the IT industry.

In a letter personally handed over during a meeting with Dr Manmohan Singh, Mr Chandy said that the scheme was one of the reasons for the success of the industry in India.

The discontinuation of the STPI had deprived several companies, especially those in the SME (small and medium enterprises) sector, the means to fund growth.

The economic meltdown had added to the woes of several small and medium companies.

There is, hence, a strong case for restoration of the STPI scheme at least for the units in the tier 2 and tier 3 cities in India, Mr Chandy said in his letter.

Over 60 per cent of the entire spending of software companies relate to employee salaries which are taxed.

A levy in the form of corporate tax leaves very little for SME to reinvest, increase headcount and grow, which is absolutely critical to staying globally competitive.

The Chief Minister added that every direct employment in the IT industry lead to four indirect jobs getting created, which has implications for promoting inclusive growth.  

Mr Chandy had earlier received a representation from the Group of Technology Companies (GTech), an industry body representing the software companies in Kerala.

“We are extremely grateful to the Chief Minister for bringing to the notice of the Prime Minister, the single biggest problem faced by the IT SMEs,” said Mr V. K. Mathews, Chairman, GTech, and executive chairman of the IBS group.

“We are hopeful that the Centre will consider the restoration of the STPI scheme at the earliest,” he added.

Kerala has nearly 75,000 employees in the IT industry, a majority of whom work for companies in the SME sector.

There is also a threat that the economic problems affecting some of the major markets would lead to closures of many, rendering several professionals jobless.

Unlike the SEZ scheme, the STPI scheme empowers small and medium size IT units to operate without any geographical restrictions.

This would go a long way in decongesting cities, Mr Mathews said.

Besides, the scheme has a successful track record in terms of its implementation and administration benefitting not only its intended recipients but also bringing in foreign exchange.