There is nothing much to cheer for IT industry here in the Union General Budget after hopes were raised on development of the city as a prominent IT hub. Except announcing a fund to encourage startups by first generation entrepreneurs, demands like slew of incentives and sanction of funds for developing ecosystem by sanctioning IT Investment Region (ITIR) have not found any place in the budget.
Visakhapatnam is the largest city in A.P. with an annual IT turnover of around Rs.1,500 crore. ITIR for which the Centre had committed during bifurcation is pending before the government after the State conducted a feasibility study by Ernst & Young.
“There is an announcement of Rs.1,000 crore for IT start-ups, out of which initially Rs.150 crore will be spent on IT hubs. This money will have inconsequential effect. Skill development seems to be the focus again, but unless there is a re-think on how to achieve this, it may be a non-starter like in the past,” Vizag IT Association (VITA) president Deepak Madala told The Hindu.
He said service tax had been further increased which would not auger well for the industry. “There are no sops to support the growth of the IT industry though there seems to be some cheer for the salaried class with raise in exemptions,” he said.
Lack of announcement on special package to AP and increase in service tax had dampened the spirit of IT investors, said Vizag Development Council vice-president O. Naresh Kumar.
He said increase in service tax would make the industries sick.
Mr. Naresh Kumar, who is the CEO of Symbiosys Technologies, welcomed reduction in corporate tax over four years. He said it would send positive signal of no further increase over the next four years ensuring stable tax regime. He said abolition of wealth tax was admission of failure to implement this act political leaders and bureaucrats who hold maximum wealth.
The decision to put off General Anti Avoidance Rules (GARR) by two years would encourage FDI, he said adding the industrialists in AP had expected better budget to create conducive investment climate.
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