MIT attests Nasscom’s agenda for Union Budget

By : |February 15, 2000 0

NEW DELHI: The ministry of Information Technology is (MIT) is in unison with
the proposed 10-point agenda of National Association of Software and Services
Companies (Nasscom) for the Union Budget-2000. Speaking to reporters here,
Nasscom president Dewang Mehta said, "Except for one point–that of
increasing the FII upper limit to invest in Infotech companies be raised from
present 30 per cent to at least 40 percent–MIT has whetted all the other
recommendations."

The other recommendations of Nasscom include:

  • No withholding tax to be deductible towards payment of IT software
    licenses;
  • No new tax on e-commerce transactions;
  • Provisions of section 10A/10B to include IT enabled services including
    call centers;
  • Accept and implement SEBI Committee report on venture capital;
  • Full freedom to Indian infotech companies to commit to an acquisition up
    to $1billion or 30 per cent of their market capitalization, whichever is
    low, without any prior approval;
  • Zero duty on software import to continue;
  • Income tax exemption to software exports to continue;
  • Enhancement of limit of investment by Indian employees in Stock option
    schemes of Foreign companies;
  • In case of ESOS and ESPS, the beneficiary be taxed only at the time of
    sale and as long term capital gains. The ESOP should also make it mandatory
    that employees can only exercise the option after at least one year of date
    of offer;
  • Enhancement of limit of investment by Indian employees in stock option
    schemes of foreign companies from $10,000 to $100,000.

Disclosing the software revenue figure of $5 billion for the year 1999
(calender year), Dewang Mehta said he expected the figure to be $8 billion in
2000. He said, "The proposed 60 per cent growth in the software revenue
should remove the fallacy that it was only because of Y2K solution that India
could earn so much." He said there are new mantras for software revenues
which includes e-commerce, web, ASP and It enabled services. In fact, Internet
security solutions alone has the potential to fetch India a revenue to the tune
of $500 million and therefore it poses a new opportunity for India software
companies.

He said that the current year would see the domestic market zooming. While in
1998 domestic software market earned Rs 4,150 crore, 1999 closed with a revenue
of Rs 6,500 crore and in 2000 it is expceted to move to Rs 9,800 crore.
According to Nasscom estimates, while Internet connections will grow up to 14
lakh from 6.1 lakh at present, e-commerce transactions are projected at Rs 450
crore in 1999-2000. And, with the Cyber Laws cleared, e-commerce is expected to
grow by 500 per cent in 2000-01 to touch Rs 2,500 crore.

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