Extension of STPI scheme to SMEs sought

Written by Preeti Parashar | Chandigarh, Feb 22 | Updated: Feb 23 2008, 06:44am hrs
The IT sector in the northern region has seen an influx of numerous small and medium enterprises (SMEs) over the past few years but is struggling hard to keep pace with the growth in metros. However, the upcoming Budget is believed to bring along a ray of hope for the SMEs. The agenda that tops the wish list of IT professionals in the region is extension of software technology parks of India (STPI) scheme to the SMEs.

Partap Aggarwal, MD, IDS Infotech Ltd expressed that since most of the companies here fall under the SME category, it's crucial that the STPI scheme be extended further. "Another important agenda is creation of a special fund to boost investments in the research and development arena. Since research and development is a long-term investment, the companies should be given some incentive for it. Further, creation of intellectual property rights should be encouraged through some kind of incentives. The IT industry also demands that the norms for overseas acquisitions should be eased so that the companies having a turnover below $ 5 million can integrate the business and do faster roll outs," he said.

Where the software exports from this region are still 14% away from their set target, the IT companies are expecting some incentives to sustain the growth hit by the rising rupee in the past few months. Sanjay Tyagi, additional director STPI Mohali shared with FE, "Where the proposal to extend the STPI scheme for another year is on the cards, another significant move can be to extend the STPI to the SMEs. What is required is that the cost, which goes into training the manpower by the industry, should be shared by the government as well. The government should develop finishing schools so that the growth of IT companies is not hampered due to shortage of skilled manpower. "

Puneet Vatsayan, managing director of Mobera Systems said that the 12% minimum alternate tax, introduced last year, is contradictory to the STPI scheme which allows tax exemptions for the companies falling under the scheme Also, MAT should be withdrawn and taxation on Esops should be rationalised, he added.