Extend tax holiday for IT sector

Krishan Dhawan

The past few years have seen phenomenal growth for companies in India across sectors – be it big or small. Companies are investing more than ever before, a trend that will carry on this year too.

As India continues to climb up the global ladder, the government needs to encourage greater investment in IT in the country as a means of increasing productivity, efficiency and competitiveness.

The IT infrastructure is as critical for economic and social growth as is hard infrastructure. Government actions could include lowering costs for the end user by rationalizing taxes that impact IT services, software and hardware domestically and putting in place policies that encourage investment in IT.

Extension of the tax holiday for the IT sector is yet another critical aspect to creating a sound IT infrastructure in the country.

In addition, the government needs to continue with its policies of encouraging eGovernance. This will enable greater efficiencies in government administration, improved citizen-government interaction and a positive multiplier effect on the pace of IT adoption in the country.

India needs to leverage its position as a global leader in the IT space for the benefit of Indian citizens and companies in India. Instead of just exporting the bulk of the productivity gains to foreign buyers, we need to increase domestic consumption for our own benefit.

There is a need to consolidate the leadership position attained by India in the global IT arena. This can be achieved by formulating policies that enable the country to maintain it’s competitive edge in terms of human resources as well as pricing. The finance minister should look at arresting the high inflation rate to ensure the country maintains its competitive edge and continues to enhance its share in the global IT pie.

The government should also look at increasing the budgetary allocation to promote higher education in the country. The allocations can be used to set-up new engineering and business schools and enhance the faculty and infrastructure in the existing schools.

To encourage private participation in education, the government can also provide sops like tax benefits to corporates who invest in education.

This would not only help in addressing the ever-burgeoning Skill Gap being faced by the IT industry but would also help in increasing employability of students in the country. The curriculum needs to be changed and updated so that it is relevant to the needs of industry.

(The author is managing director, Oracle India. The views expressed here are personal. CyberMedia News – or CyberMedia Group – need not necessarily subscribe to his view in parts or in full).

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