Seeks revival of scheme for units in tier 2, 3 cities

Chief Minister Oommen Chandy has written to Prime Minister Manmohan Singh seeking restoration of the STPI (Software Technology Parks of India) scheme for the revival of the IT industry in the country.

In a letter to Mr. Singh, Mr. Chandy said the Centre should consider revival of the scheme for a period of five years from the current financial year, at least to those units in tier 2 and tier 3 cities to help IT firms tide over the immediate crisis.

The representation follows a meeting Mr. Chandy had last week with GTECH (Group of Technology Companies), the industry body representing the IT industry in Kerala. GTECH had in a representation to the Chief Minister said the discontinuance of the scheme was the single biggest setback facing the small and medium companies.

“In one stroke, the Government of India can rejuvenate the sagging fortunes of Indian IT units in the small and medium enterprise (SME) sector. The IT industry is the largest employer in the private sector with over 30 lakh people employed directly and another 95 lakh gaining indirect employment. Not only will this game changing initiative ensure creation of more jobs, it will also see IT companies flock to smaller towns and cities, thereby decongesting the metros,” chairman of GTECH V.K. Mathews said.

The GTECH’s case is that over 60 per cent of the entire spending of software companies relate to employee salaries which are taxed and hence the contribution to the exchequer remains significant.

The industry body reasons that additional levy in the form of corporate tax leaves very little for IT units in the SME sector to re-invest, increase headcount and grow, something which is absolutely critical to remain globally competitive. Apart from a no tax policy on exports, the STPI scheme empowers IT units to operate without any geographical restrictions, unlike the SEZ scheme.

“The STPI scheme was a key contributor to the success of the Indian IT industry in its infancy,” GTECH secretary Anoop P Ambika said.

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