Fiscal policies to attract IT investments in smaller cities, and incentives for small and medium enterprises (SMEs) to drive technology adoption are some of the measures promised by the draft IT policy.
The framework, which was announced by the Communications and IT Minister, Mr Kapil Sibal, on Friday also proposes to build R&D infrastructure and test facilities for the development of emerging technologies such as cloud computing and GIS (geographic information systems). It proposes “requisite policy changes” and a “stable tax regime” to make India a preferred destination for IT and BPO companies.
The draft is now open for public consultation, and is expected to be finalised by December, along with two other policies for telecom and electronics. The IT policy aims big — it wants to increase revenue from the IT and BPO industry to $300 billion by 2020 from $88 billion now, and raise the export turnover to $200 billion, from the current $59 billion. It targets the creation of 10 million skilled tech hands by 2020 in the formal and non-formal sectors. At present, the sector employs 2.5 million professionals.
It, however, does not spell out the incentives, sops or measures that will be rolled out to achieve these targets.
Asked whether the Government would continue tax benefits for the sector, Mr Sibal said, “We are waiting for the Direct Tax Code to be put in place and then we will come out with the framework of concessions. We can't talk about the specifics at this point.”
The tax holiday under the STPI scheme ended in March this year, and the Budget has imposed a Minimum Alternate Tax (an effective rate of 20 per cent) on profits from SEZs. Together, these have increased the tax burden on the industry, especially SMEs.
“It is good that the draft policy gives a long-term direction … it is not a year-on-year approach,” Nasscom President, Mr Som Mittal, said.
The other plans include: Making at least one individual in every household e-literate and setting up Centres of Excellence in institutes of higher learning to produce at least 3,000 Ph.D.s in ICT in specialised areas by 2020. It also talks of making India a global hub for language technologies and mandating public procurement through the electronic mode across Departments within a fixed time. It also speaks of implementing a framework for placing data in the public domain for use and value addition.