'Budget brings relief for IT-BPO industry'

Som Mittal, President of Nasscom, must be complimented for steering India's IT-BPO sector during this turbulent period. Mittal has been closely working with the government to ensure that the global slowdown has limited impact on the domestic infotech companies.

Forget job losses, Mittal's prime aim is to create more jobs in the IT-BPO sector, thereby having a positive impact on the economy. He believes that the sector has the potential to transform the country and play a vital role in the development of education, healthcare, infrastructure, citizen services and financial inclusion.

From manufacturing through automobiles to information technology, the alumnus of IIT Kanpur and IIM Ahmedabad has held top positions across industries.

In this exlusive article for Sify, he explains how the Budget would benefit the IT-BPO industry.

The Finance Minister Pranab Mukherjee has placed the common man at the centre of the Budget. According to him, alongside inclusive growth, the Budget also aims to provide a fillip to the economy.

In his Budget speech, the Minister extolled the role of the private sector in India's growth and recognised, in particular, the contribution of the IT-BPO industry to the country's economic progress. He added that the Budget had provided necessary measures to boost the sector.

The Budget announcements are welcome, especially in view of the global downturn having changed the business environment and adversely impacted the Indian IT-BPO sector. Industry growth figures have plummeted to single digits in FY2009-10, affecting creation of new jobs.

At the same time, direct and indirect protectionist measures by major countries are threatening the successful business model that the Indian IT-BPO industry has embraced and evolved over the years. In this scenario, Budget 2009-10 comes as a relief, with the Government coming forward and supporting the IT- BPO industry when it is most required.

Nasscom hails the government's intent to leverage ICT in governance. The IT-BPO industry, with its vast expertise in building global solutions and processes, has the potential to transform the country and play a major role in the development of key sectors, including education, healthcare, infrastructure, citizen services and financial inclusion, thereby creating significant employment opportunities across India, with a consequential impact on economic growth.

Nasscom and the industry are looking forward to working closely with the government on this key agenda.

Going forward, we are looking to partner with the government in rolling out and scaling e-governance initiatives related to modernisation of employment exchanges, the UIAD project, and smart cards for healthcare services. The Government's announcement that it would step up its focus on education by enhancing its provision for the scheme "Mission Education through ICT," and allocating adequate budgets for IITs and NITs, is a positive move that will spur creation of a larger talent pool. The government's intent to facilitate speedy implementation of infrastructure projects as these will be crucial for economic growth is indeed a welcome move.

The Finance Minister's decision to extend fiscal benefits available to the industry under Section 10A/10B for one year will help the industry mitigate the impact of the current economic environment and help India retain its competitiveness. This will also facilitate continued growth of SMEs, provide parity with incentives under the SEZ scheme and encourage industry to move into Tier 2/3 cities.

The Budget proposals also address Nasscom's recommendations relating to multiplicity of taxes on packaged software, creating a dispute resolution mechanism on transfer pricing, abolishing FBT and issues on service tax refund. The combined effect of these proposals will facilitate the industry and its 2 million workforce to compete effectively and sustain India's advantage.

Nasscom will continue to examine the fine print and seek clarifications as needed.

By and large, the IT-BPO industry is pleased with the Government's effort to provide a stimulus to the economy through tax relief, increased expenditure on public projects and liquidity enhancing measures.

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