Negative sentiment over IT Export businesses

Could this be the precursor to nervousness in the software export market? With the incentives out the door, Pune's eco-system could be impacted, on March 31st, 2006 Pune recorded Re 9100 crores in Software exports.

The hope is that the focus will switch to understanding which Indian technology products company is a real long-term success story. A systems survival is guaranteed if and only if there is a balance between opposing forces.

From the Hindustan Times, May 19th 2006:

Kamal Nath’s efforts have failed to cut much ice with Finance Minister P. Chidambaram, in spite of his having written to the PM. Nath had stressed the need to continue income tax exemptions for export-oriented units (EOUs) and software technology parks (STP).

He had also raised the issue of exempting from central sales tax supplies from direct tariff areas to EOUs.

In a detailed response to Nath’s contentions, the Finance Ministry has said the tax benefit in respect of export profits of STP and EHTP units under Section 10 A and EOUs as per Section 10B is available only upto assessment year 2009-10.

“The issue of extending the sunset clause existing in Section 10B was examined by the PM’s Economic Advisory Council which has recommended that there is no justification to extend the period for which the deduction is available,” it stated. In fact, as part of its review of 162 exemptions posted this week on its website, CBDT has included both Sections 10 A and 10 B providing incentive to exporters. This clearly shows the Finance Ministry’s intent to prune select exemptions.

Moreover, the Finance Ministry said the tax benefit under Section 10 A had been placed on the same footing as Section 10B. The matter was considered by the committee of secretaries, which decided against re-visiting the issue in view of the recommendation of the PM’s economic advisory council, it added.

As you can probably guess – I am convinced that India ought to and has the ability to produce complete solutions. Solutions that better world standards, that improves lives here in India.

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