While IT majors like Infosys, Wipro and TCS have once again logged impressive results, the small and medium IT industry says it is still waiting for policy initiatives to shore up its bottom line.
Speaking to newspersons here on Thursday, Electronics and Computer Software Export Promotion Council (ESC) President Vinod Sharma pointed out that their demand was not protectionist in nature. In case Japan, South Korea and China went ahead with plans to set up electronic manufacturing zones in India, ESC would support them.
“Demand [for electronic hardware] is expected to reach $400 billion by 2020. The most optimistic estimate puts domestic production at $100 billion, leaving a gap of $300 billion. Imports of this nature and quantum cannot but put more pressure on the current account deficit. In fact, the import bill for electronics [products] might even cross the oil import bill by 2020,” fears Mr. Sharma.
ADVERTISEMENT
In the case of software by SMEs, the ESC feels the sector should also get tax benefits such as the bigger companies by introducing the concept of virtual Special Economic Zones (SEZs). According to ESC Executive Director D. K. Sareen, it will be very prohibitive for small and medium units to physically shift their operations to SEZs. He sought an early decision on a two-year-old proposal sent by the Department of Electronics to the Finance Ministry for giving some tax benefits to IT exports by such units.
The ESC President referred to plans by some States, including Delhi for hardware parks and clusters under the public-private partnership (PPP) mode with basic infrastructure such as electricity, roads and facility for destroying e-waste. This cluster approach for hardware SMEs would bring down overhead and transaction costs while the virtual SEZ approach to small and medium software units would further incentivise them, reasoned Mr. Sharma.