Despite the Budget remaining quiet on the extension of the Software Technology Parks of India (STPI) scheme, there may still be some hope for the industry. Communications and information technology (IT) minister A Raja on Thursday said he is hopeful that the finance ministry will agree to extend the scheme by another 10 years.
?I have once again discussed the proposal with finance minister P Chidambaram and am confident he will look at extending it, although he does have some reservations,? Raja said. He added that he has also apprised Prime Minister Manmohan Singh about continuing the scheme who has interacted with the FM over the issue.
If the scheme now has to be extended, it will have to be done during the course of the fiscal year, as by the next Budget, it will lapse.
The STPI scheme, which provides a number of tax benefits including a 10-year tax holiday to units registered under it, is set to get over in March 2009. Any announcements on the extension of the schemes had to be made in this Budget to ensure continuation of the scheme.
Finance ministry officials had earlier told FE that the scheme would not be extended, as a 10-year tax holiday is more than enough for any industry to establish itself. Further with special economic zones (SEZs) coming up in a big way, the STPI scheme will be superfluous.
The software industry, however, is of the view that continuing the scheme would promote the nascent software industry in India. The industry has already been adversely impacted by the rising rupee, which rose over 13% since January 2007, although it is now decelerating.