MUMBAI, INDIA: The Union Budget for 2009-10 is surely going to stand out in the time for two reasons. First, the United Progressive Alliance (UPA) Government will be presenting the Budget in such a time where Indian economy as well as world economies are battling against recession.

And secondly, the government is under tremendous pressure from the business community's huge expectations. This time around, the pressure and expectations are from each and every vertical including IT, which makes the government's life even more difficult in fulfilling those many expectations.

However, will the IT sector get contend with small tax benefits, STPI scheme continual or large strategic reforms? It's a million dollar question at the moment.

Gartner India's vice president, distinguished analyst and regional research director, Partha Iyengar calls this budget as a historic one for various reasons. According him, compared to past budgets, it's for the first time that a government with full mandate, will be presenting the budget.

He wants the government to focus on strategic initiatives to support the industry such as education, infrastructure, local and international connectivity etc, and not at small tax incentives.

“Specifically, from IT sector perspective, we have reached a maturity point where it's pointless to focus on minor tactical ‘tweaking’ of support to industry with the eternal bogie of ‘tax incentives',” says Iyengar.

“Focus more on strategic opportunity and future competitive imperatives for the industry and frankly across the country in terms of a significant and systemic focus on education and infrastructure reforms,” he adds.

He considers education and infrastructure reforms as two critical pillars to determine Indian IT industry's fate that will either prosper to become an IT 'superpower' or die and relegated back to the 'body shopping' days on the world IT stage in the next 5 to 10 yeas.

And he points out, “If the Indian IT sector's only focus remains whether the tax breaks are extended or not, a tremendous disservice will have been done to the industry, in spite of (seemingly) meeting their needs.”

Take special steps

However, Sridhar Reddy, CtrlS Datacenters chairman and managing director desires the government to take special steps for IT industry, given the present global recessionary scenario.

“The government is a huge consumer and should accelerate the budgeted spend on various activities like SWAN, data centers, national mission on education via ICT and e-governance projects,” he says.

Further, he wants the government to bring in certainty as the banks, manufacturers, exporters and IT/ITES companies are postponing their expenditure due to the prevailing uncertainty and awaits stimulus packages from the government.

Reddy, however, views, “If firms don't spend, then we will see further deceleration and it affects the IT industry, so extend the STPI scheme by another five or ten years and rationalize customs duty on imported equipment.”

He strongly advocates for IT as means to boost productivity and suggests, “The government should go all out for zero import duties on IT equipment. The revenue loss would be more than compensated by the increase in taxes like VAT.”

While, CEO of Four Soft Ltd, Rajshekhar Roy says, “Being part of IT and ITeS industry, there's long wish list such as invest in higher education to create work force for industry, boost domestic IT spends to aid companies affected by slowdown in US and Europe along with more tax exemptions for the sector.”

Roy feels that due to economic situation any extension of at least 2-3 years will have great impetus to the struggling industry.

Even, Globsyn Group's chairman and CEO, Bikram Dasgupta wishes the same from the Government.

“India still holds the prime attention in the software industry, but the government still needs to boost the sector as there are many software firms in the SME space,” says Dasgupta.

Apart for tax or schemes, the IT sector is keen to expand knowledge base in the country as it needs more local talents to push the industry. Stressing on critical pillars, Iyengar asks the government to improve the state of infrastructure in education – primary and secondary levels education quality and availability (forget tinkering with the IITs and IIMs – that’s the least of the problems!).

“The significance for these pillars for IT sector's growth is that in longer term, the biggest issue for India today is quality of manpower, with, anecdotally, only 20-25 per cent of the graduating work-force being employable,” he comments.

On education, Aptech's CEO and managing director, Ninad Karpe comments, “Indian education and training sector has not received the attention it deserves. Hopefully, this budget will ensure to address the 3Ps – participation, performance and proportion for the education sector.”

Karpe says the private players should be allowed to participate and contribute to this sector in a more unfettered manner.

Moreover, he desires large funds to be allocated to education from the budget as it's really an investment in India’s future.

While the IT industry raises its voice to put forward their wish lists in front of the Central Government, will those wishes be satisfied and incorporated in union budget for 2009-10 only time can tell.