Nasscom asks for STPI extension to reverse investment trend
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By PTI |
MUMBAI: IT industry body Nasscom has said multinational and domestic IT firms have started making more investments outside India and asked for a 10-year extension of tax concessions under the STPI ((Software Technology Parks of India) scheme to reverse the trend.
"We are concerned that both MNCs and Indian companies are beginning to increase their spread of investment to other destinations," Nasscom President Kiran Karnik said on the sidelines of a conference here.
Earlier, out of $100 investment, $80 used to come to India and only $20 went to Phillipines, China or Vietnam, but now "we are beginning to see the ratio changing to 70:30 or even 60:40," Karnik said.
Impact of this trend would be seen in the long-term, he added.
"If we want to be number one in IT, like Japan in automobiles, in the next 10 years, then we have to look at how we can continue to be attractive," he said.
Calling for broad support from the government, Karnik said the tax and fiscal environment should be made conducive beyond 2009. "Our plea is that the concessions under Software Technology Parks of India (STPI) should be extended for a 10-year period to make IT business affordable for SMEs and start-ups," he said.
Under the STPI scheme, firms get tax holiday on profit from exports. The scheme ends by March 2009.
Commenting on the impact of rupee appreciation on the IT sector, Karnik said: "The rapid appreciation of 15 per cent in rupee value had a big impact particularly on SME sector and BPOs, while big IT companies were able to hedge correctly."
"We are concerned that both MNCs and Indian companies are beginning to increase their spread of investment to other destinations," Nasscom President Kiran Karnik said on the sidelines of a conference here.
Earlier, out of $100 investment, $80 used to come to India and only $20 went to Phillipines, China or Vietnam, but now "we are beginning to see the ratio changing to 70:30 or even 60:40," Karnik said.
Impact of this trend would be seen in the long-term, he added.
"If we want to be number one in IT, like Japan in automobiles, in the next 10 years, then we have to look at how we can continue to be attractive," he said.
Calling for broad support from the government, Karnik said the tax and fiscal environment should be made conducive beyond 2009. "Our plea is that the concessions under Software Technology Parks of India (STPI) should be extended for a 10-year period to make IT business affordable for SMEs and start-ups," he said.
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Under the STPI scheme, firms get tax holiday on profit from exports. The scheme ends by March 2009.
Commenting on the impact of rupee appreciation on the IT sector, Karnik said: "The rapid appreciation of 15 per cent in rupee value had a big impact particularly on SME sector and BPOs, while big IT companies were able to hedge correctly."
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