Nasscom for extension of STPI to offset rising Re

BANGALORE: IT/ITES trade body Nasscom is pushing for extension of the STPI scheme for a few more years to partially offset the rupee appreciation impact. It is currently engaged in a dialogue with the government in this regard.

Speaking at the Nasscom India ITeS-BPO Strategy Summit 2007 in Bangalore, Nasscom president Kiran Karnik said, “We are witnessing a rupee appreciation of 8-9% in the past few months. The appreciation of rupee against the dollar does not augur well for the growth of IT and ITES industry.

We have been engaging the government on this. We have not had it easy. At least, the government can partially offset the losses faced by the BPO firms by extending the STPI scheme.” The STPI scheme, which offers tax incentives to IT/ITeS companies, will expire in 2009.

“Some people in the government believe that rupee appreciation is inevitable and IT industry has to absorb it. There are some, who think intervention is necessary. We are trying to convince the government on the need to hold the currency steady,” he added.

According to Mr Karnik, rupee appreciation on the long term will impact India’s IT competitiveness with other countries. He said, “The IT industry’s competitiveness will be impacted, especially when compared to other countries, which are holding their currency steady against the US dollar. If Indian IT industry has to grow and provide more employment, this concern has to be addressed.”

Nasscom chairperson (ITeS-BPO forum) and Genpact CEO Pramod Bhasin said that it was important to nurture the BPO sector, which was poised to become one of the biggest private sector in terms of employment opportunities. He also stated that SEZs were no replacement for STPI scheme. ``Some big players will definitely set up SEZs. But what about the small players? They cannot go into some tertiary city and set up operations. I guess the regulatory mechanism has to be addressed,’’ Mr Bhasin said.

Addressing a session on `CEO insights on managing profitable growth with rising costs’, Infosys CEO S Gopalakrishnan said, ``there are three elements one has to look at for getting higher margins - organisational culture, business model and discipline. These three elements encompass things like looking at optimisation all the time, systems and processes, bench support etc.’’