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'Future's bleak for small, medium IT firms'

Faced with a severe financial crunch small and medium IT firms have urged the government for a five-year tax holiday for those companies with turnover of less than Rs 100 million.

This alone will save the companies from their severe financial crunch and give them enough time and space to recover. The main hurdle against growth is erosion of market share of small and medium IT companies of India whose main business with the United States have declined.

National Association of Small and Medium IT Companies of India chairman P K Sandell said on Friday: ''The advice given by the government to the sector is correct -- diversify geographically and go up the value chain through vertical integration and skill upgradation, but where is the package of incentives and measures necessary to achieve these goals. The package does not exist.''

NASMEIT has warned that India will fall short of achieving the $50 billion export target if the government does not give due recognition to this crucial sector.

Sandell said: ''The government has not appreciated the critical role which the small and medium companies play, since the very advisory committee formed by the minister for IT and communication, contains only representatives of large and powerful IT companies, not a single representative of the small scale sector is there to represent their views.''

As a result, the entire structure of incentives as well as the policy and regulatory framework that the government has designed to help the (IT) industry has not taken into account the small and medium sector.

He said that the issue of taxation needs to be addressed.

''This is a ridiculous situation considering that, if taxation is meant to be a justified vehicle for earning revenues it stands to reason that the large can pay more than the small,'' he said.

UNI

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