Ponnala Seeks Tax Holiday Extension

Minister for Information Technology Ponnala Lakshmaiah assured a delegation representing about 150 IT firms that he would take up their demand for an extension of the tax holiday for STPIs, or recognize the IT industry as a part of the Special Economic Zones (SEZs).

Lakshmaiah's assurance to the IT industry representatives, who met him under the aegis of IT Serve Alliance (a U S A-based association formed for the preservation and protection of the needs of U S A-based IT firms), came during a meeting held in Dallas, Texas, on March 20th.

IT Serve Alliance President Satish Mandava told Lakshmaiah that the STPI tax holiday had expired, and that it needs to be extended by at least 3 years as many IT companies derive benefit through this feature. If this is not feasible, the STPI firms need to be recognized as a part of the SEZs, he said

Mandava also said that the small and medium sized firms need to be given a due share, and that a fair share of space needs to be allocated for them in the SEZs. The space recovered from the built-up SEZs may be allocated to Small & Medium Enterprises (SMEs) for immediate occupation, he suggested.

IT Serve Alliance also pointed out that the IT services industry is currently protected under the A P Essential Services Maintainance Act, 1971, in the state. He said that IT Serve Alliance would like the Government of India to declare IT services as Emergency Services, to avoid the disruption of services to U S clients, especially during the times of regional political tribulations.

IT Serve Alliance also sought land for constructing an IT services corridor, represented by 100% EOU (Export Oriented Units) firms, besides the creation of a diplomatic liaison office to resolve matters like the Tri-Valley State University and H1B visa issues at the consulates.

The IT Minister immediately agreed to take the representation to Government of India's Ministry of Information Technology, Ministry of External Affairs and Ministry of Commerce to ensure that the requests from IT companies are taken up seriously.

Lakshmaiah had also called on the officials of the Government of Andhra Pradesh, and had asked them to go through the requests of the industry and streamline the feedback so that it can be taken to the Government of India, on his return to India.

These 150 member companies record a total turnover of U S $750 million per year (Rs. 3,500 crores per year) with an employee strength of more than 7,500 in the U S A. The companies are located mostly in the Southwest, Southeast and Midwest regions of the United States.

With regard to the Indian context, 90% of the companies perform back office operations from India, and a majority of these companies have a presence in India. About 40% of these firms have software development divisions supporting products and strategic solutions. Currently, the member companies of the IT Serve Alliance occupy over 3,00,000 SFT in Hyderabad, Visakhapatnam and Bangalore, with a majority representation in Hyderabad.

The Indian operations of these companies employ over 15,000 people, and all these companies are either registered with STPI or are operating in an SEZ.

Courtesy: INN