Big opportunity for IT in domestic market

The Budget has highlighted the big opportunity for IT in the domestic market with the decision to allocate additional funds towards the state wide area networks, common service centers and data centers.

Service tax for software For domestic customized software market, there have been small changes with the sector being brought under the service tax net.

This will increase the cost of technology for users and push up the cost of automation not just in the private sector but also in public sector and government departments.

Another factor that could push up costs for deploying technology is that customs duty for importing packaged software has been increased from 8% to 12%.

This would increase the input cost across industries, not just the IT industry. Building a knowledge society The good news for IT and the people-intensive industries is the incentives to education with 20 per cent more outlay.

Announcement of three new IITs, IIScs and 6000 high caliber schools shows commitment to quality education which augurs well for our supply chain and human capital.

The Rs 85 crore scholarship scheme for students pursuing science education is good news for IT and especially for TCS which has been tapping into the science streams through our own from science to software transformation program for students.

Infrastructure development is another area that needs serious addressing and it is good to see the budget devoting attention to it.

The Rs 14000 crore Rural Infrastructure Development Fund, emphasis on Rural Roads etc would strengthen the much needed tertiary backbone of the economy and create greater confidence in global business that looks forward to partnering India; it would also go a long way in ensuring inclusive growth to spread the benefits of prosperity to wider sections of the society.

Mitigating risks What also bodes well for the export-oriented IT industry is the focus on the speed of the currency’s appreciation in the light of continuing foreign exchange inflows.

The impact of capital inflows, has been identified as a key threat in the coming year and the FM has put in place various mechanisms including more than a two-fold increase in the market stabilization fund to help the RBI manage forex inflows in a calibrated manner.

From an overall perspective and following on from a “cautiously optimistic” economic survey, Budget ’08 has been crafted to protect the economy from global headwinds so that the growth momentum can continue. Significant Increase in social sector outlays, especially in education and healthcare, have once again highlighted the inclusive nature of the government’s reform program.