The Hindu Business Line : Right moves to make IT sector competitive

THIS year's Budget proposals very clearly aim to put India on the global map in terms of competitiveness, which is imperative given the WTO requirements, according to Mr S. Ramadorai, CEO, Tata Consultancy Services.

For the IT sector, the continuation of benefits under Section 10A and Section 10B, as well as the proposal for continuation of the tax benefits even in the event of a change in the shareholding pattern were very welcome, he said.

"The steps for the automation of the Ministry of Finance are also a step in the right direction. The Finance Minister should be complimented for the overall proposals in the areas of bio-technology, R &D, as well as the reduction in tariffs in the IT and telecom sectors."

Mr Lakshmi Narayanan, President and COO, Cognizant Technology Solutions: Continuation of benefits under sections 10 A and 10 B is definitely a confidence boosting measure for the IT industry. Apart from continuing the benefits, the Finance Minister has clarified that the benefits of 10 A and 10 B post change of ownership — either because of acquisition or merger — exists. This is a welcome clarification, as there seemed to be a level of discretion that existed earlier in cross-border mergers and acquisitions.

Excluding pre-loaded software (such as embedded software or operating system) in hardware from the purview of valuation is also a move in the right direction. The Finance Minister has honoured the commitment of his predecessors by reducing the duty on hardware from 25 per cent to 15 per cent.

The Finance Minister has unfortunately not made any dramatic moves to take the growth to eight per cent to 10 per cent levels. There has been no attempt to give a push to disinvestment, reduce government spending or reduce subsidies that would propel growth.

Arun Duggal, CFO, HCL Technologies: Tax neutrality for reorganisation is a welcome move, which will allow the industry to leverage synergies and reap the benefits of consolidation. For companies such as HCL Tech who are seeking to grow both organically and through acquisitions, this is particularly relevant.

Distribution Tax on dividends at 10 per cent plus surcharge will mitigate the impact of double taxation of dividends. On a larger canvas, the initiatives towards strengthening the IT and telecom infrastructure of the country, are steps in the right direction to ensure global competitiveness and making India the preferred provider of IT and IT-enabled services.

Mr D.V.S. Raju, CMD, VisualSoft Technologies: The extension of tax sops for the technology sector has come in at the right time. We were particularly concerned about this issue as any change would have been a retrograde step.

The reduction of the corporate tax to 2.5 per cent is a welcome move. However, while the shareholders will benefit from the removal of dividend tax, the companies will now have to bear the additional tax burden as this has been increased from the present 10 per cent to 12.5 per cent.

Mr J. A. Chowdary, Managing Director of PortalPlayer and former Director, Software Technology Parks of India: The Finance Minister has not done much to boost the hardware sector and to make the Indian industry globally competitive.

This is one sector that needed a greater supporting role from the Government. With the WTO stipulations set to come in soon, the industry would not have adequate time to be ready for the challenges.

Mr M. D. S.Bosco, Chief Operating Officer of Intelligroup Asia: It is good that Section 10A/10B concessions have been retained. This will help the small units and MNCs. - - Our Bureaus

Article E-Mail :: Comment :: Syndication

Stories in this Section
Phone bills to keep you awake

Right moves to make IT sector competitive

Service tax will impact IT training, says Aptech