Economy

‘Demonetisation will not hit IT sector hard’

The demonetisation of high-value currency notes will have only a minor impact on the revenues of the outward-facing IT industry, asserted Shiva Ramani, CEO of iOPEX Technologies, a San Jose-based company engaged in providing optimised IT management services. Founded in 2009, iOpex has a large presence in Chennai.

‘Lower tax?’

Since most of these firms were in the tax bracket and part of the banking system, the demonetisation impact had been low on them, Mr. Shiva Ramani said. “There is excitement for us, however. What if this drive increases tax compliance? What if this brings down corporate tax? It will be a phenomenal boom for us,” he added. He termed the demonetisation exercise a “very bold move.”

He, however, said he would not hazard a guess as to whether it would pan out to be good or bad. “How good or how bad is the next question. But being decisive is in itself a big change from the last 10 years,” he added.

“In the long-term, India will be a very viable market. And, if cashless or declared income becomes the middle of the pyramid, then all of us have a lot to gain,” he said.

On the near-term impact of demonetisation, he said “economic activity will be significantly suppressed in the short-term. Rupee will further depreciate against world currencies.” However, he felt that some of these shocks could be manageable since the oil prices “are still marginal”.

If the revenue was dollar-denominated, it would help the IT firms as their rupee revenue would go up significantly, he said.

Quizzed on the the impact of Donald Trump's election as the new President of America on the Indian IT industry, he said, `` It is a complicated story. IT outsourcing will have marginal impact especially when local workforce is replaced by H1 workers as a part of large outsourcing deal involving offshore and onshore. But, in general, as the broader stock market is showing, it is overall going to be lot more business-friendly. As such, U.S. business will spend more and the knock on effect of more IT spend will happen.'' He said that the American democracy had got a lot of checks and balances. "There will be a bit of inward focus but it won't be as catastrophic as everybody thinks. He (Mr. Trump) has already found middle ground on all his policies,'' Mr. Shiva Ramani pointed out.


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Printable version | Jan 27, 2022 7:28:18 PM | https://www.thehindu.com/business/Economy/%E2%80%98Demonetisation-will-not-hit-IT-sector-hard%E2%80%99/article16716906.ece

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