USIBA applauds STPI tax holiday extension

WASHINGTON DC, USA: On Tuesday, April 29, the Union Finance Minister P. Chidambaram extended the income tax exemption for export-oriented Software Technology Parks of India (STPI) by one year till March 31, 2010, a move that was overwhelmingly welcomed by the IT industry and the US-India Business Alliance (USIBA).

"The move will primarily give some welcome respite to Indian SMEs who would have found it hard to move into SEZs," says Sanjay Puri, President of USIBA. "For this reason, we look forward to a more permanent approach to the issue of continued incentivization of this very important segment of the Indian IT industry."

Established in 1991 as a government agency under the Ministry of Communications and Information Technology, STPI has been critical in paving the way for India becoming an IT powerhouse. The Software Technology Park scheme is an export-oriented scheme for the development and export of computer software. The scheme provides physical infrastructure, including dedicated high-speed connectivity, freedom for 100 percent foreign equity investment, and tax incentives.

More than 6,000 businesses are registered under the STPI umbrella, with 36 percent growth by value in 2005-06 exports over the previous year. The state with the largest export contribution was Karnataka. STPI has a presence in many of the major cities of India including the cities of Chennai, Hyderabad, Noida, Lucknow, Kanpur, Allahabad, Patna, Gandhinagar, and Mumbai.

The USIBA is a trade association based in Washington, DC. By drawing its strength from the Indian-American community, USIBA is recognized today as one of the most influential trade groups working for increased commerce between the United States and India.