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'Govt must incentivise IT services sector to boost exports'

September 09, 2013 16:52 IST

Industry body Assocham has sought from the government incentives for information technology services sector in the country to boost their exports.

"India's IT services sector witnessed 4.2 per cent growth in 2012-13, while Russia and Philippines grew at a massive 69 per cent and 27 per cent, respectively. In face of increasing competition from abroad, it is imperative that IT industry be incentivised towards increasing its export growth," the chamber said in a letter to Commerce Minister Anand Sharma.

Elaborating on the measures needed to incentivise IT services sector, Assocham has proposed that incremental export incentive scheme be extended to software services sector in order to encourage businesses to re-locate to India or scale up their presence.

It also suggested that a fully tradable scrip of value equal to seven per cent of incremental exports over and above the previous year be granted, which could be used for payment of any customs duty and the scheme should be extended for a five-year period.

Stating that Software Technology Parks of India scheme has lost its charm with the income tax benefit being withdrawn from 2011 onwards, the chamber stressed upon the need to attract new IT services organisations.

The business chamber also suggested for combining a few schemes to reduce complexity in the export-import policy. Highlighting that India could become a hub for repair and re-manufacture of factory refurbished goods owing to availability of low-cost skilled labour, Assocham proposed that the policy in this regard be suitably amended.

At present, the export-import policy restricts import of used goods while the process of applying for their import license is also cumbersome. According to estimates, India's share in trade of such goods has been less than $10 million while that of the US and European Union was to the tune of about $20 billion till a few years ago.

Besides, Assocham has also suggested the Commerce Ministry to re-engineer the trade policy by incentivising existing manufacturer-exporters to increase investment and provide fiscal incentives to micro, small and medium manufacturers as well as exporters.

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