Nasscom pitches for STPI extension
Nasscom Product Summit 2006 here on Tuesday, Karnik observed that the SEZ concept was clearly geared for the manufacturing sector.
By TNN |
PUNE: Observing that the special economic zone (SEZ) model was “not suited at all’ ’ for the information technology (IT) industry, National Association of Software and Services Companies president Kiran Karnik has called for a 10-year extension to the Software Technology Parks of India scheme for tax benefits on IT exports.
“We (Nasscom) have made a recommendation to this effect to the Centre government,’’ Karnik said. The STPI scheme, under which IT companies avail tax exemptions on software exports, has worked extremely well in promoting the industry, he said. The scheme is to end in 2009. While the Centre is considering the SEZ model as one of the ways of continuing with tax benefits for the IT sector, the same has drawn a wide-ranging debate among the IT community.
Speaking to reporters on the sidelines of the Nasscom Product Summit 2006 here on Tuesday, Karnik observed that the SEZ concept was clearly geared for the manufacturing sector.
“The government is trying to make modifications, but we have issues to sort out. Like, the provision for minimum requirement of land and the overall mindset of applying the scheme on the manufacturing line,’’ he said.
Karnik observed that the SEZ scheme might work for big IT companies , but not for small companies.
The scheme, in its present form, tends to promote interests of real estate developers and was leading to ‘land grab mentality’ , he said. “I have seen this happening to places like Noida,’’ he said, adding, Nasscom had brought this to the notice of the finance ministry.
“We (Nasscom) have made a recommendation to this effect to the Centre government,’’ Karnik said. The STPI scheme, under which IT companies avail tax exemptions on software exports, has worked extremely well in promoting the industry, he said. The scheme is to end in 2009. While the Centre is considering the SEZ model as one of the ways of continuing with tax benefits for the IT sector, the same has drawn a wide-ranging debate among the IT community.
Speaking to reporters on the sidelines of the Nasscom Product Summit 2006 here on Tuesday, Karnik observed that the SEZ concept was clearly geared for the manufacturing sector.
“The government is trying to make modifications, but we have issues to sort out. Like, the provision for minimum requirement of land and the overall mindset of applying the scheme on the manufacturing line,’’ he said.
Karnik observed that the SEZ scheme might work for big IT companies , but not for small companies.
The scheme, in its present form, tends to promote interests of real estate developers and was leading to ‘land grab mentality’ , he said. “I have seen this happening to places like Noida,’’ he said, adding, Nasscom had brought this to the notice of the finance ministry.
ADVERTISEMENT
Acquiring large areas of land was no big deal for IT majors like Infosys or Wipro, but estate developers know well that small companies go to SEZs for tax benefits. So, they hike up the rent of their facilities. The software exporter stands to benefit little, Karnik said. Referring to the modifications being worked out, Karnik said that Nasscom had pushed hard for complete withdrawal of the land clause. “We are not so opposed to the built up area clause although , that also makes no sense to the IT industry,’’ he said. SPECIAL ZONES NOT ENOUGH
Nasscom president Kiran Karnik has called for a 10-year extension to the Software Technology Parks of India scheme for tax benefits on IT exports.
The STPI scheme, under which IT companies avail tax exemptions on software exports, has worked extremely well in promoting the industry. The scheme is to end in 2009.
While the Centre is considering the SEZ model as one of the ways of continuing with tax benefits for the IT sector, the same has drawn a wide-ranging debate among the IT community.
He ssaid that the SEZ concept was clearly geared for the manufacturing sector. and the SEZ scheme might work for big IT companies, but not for small cos.
ADVERTISEMENT
... seeks tax waiver
Pune: Nasscom is negotiating with the central government a tax write off scheme for investments in IT research and development (R&D ) along the lines of such write-offs extended to the R&D investments in automobile and pharmaceutical sectors. “We are in talks with the ministry of commerce and the department of science and technology ,’’ Nasscom chief Kiran Karnik said, adding that the scheme may come through by next budget session.
He said India’s sustainable longterm advantage was in intellectual property (IP) and product creation space. Nasscom, in association with the government, was working on creating an apt environment for companies getting into IT R&D , he said. Karnik said that India’s USP was not the low wages and huge skill sets, but definitely innovation and creativity, which fits beautifully into IP and creation space.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
