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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3663)	2/6/1999 10:23:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Software exports up 68 pc: Nasscom Saturday, February 06, 1999 Info-Tech Date: 06-02-1999 :: Pg: 07 :: Col: b Our Bureau NEW DELHI, Feb. 5 ANNOUNCING the results of the Nasscom (National Association of Software and Services Companies) Survey on the Indian software industry, Mr. Dewang Mehta, Executive Director, Nasscom, said software exports grew by 68 per cent in 1998, from Rs. 5,640 crores to Rs. 9,500 crores. Mr. Mehta attributed this to a growing respect for the Indian software industry in the international market. According to Nasscom, during 1998, more than 158 of Fortune 500 companies outsourced their software requirements from India. Complimenting the National IT Task Force in creating an IT revolution in the country, Mr. Mehta urged the Government to quickly implement the remaining 15-odd pending recommendations in the First Report (Software) of the task force. For 1998-2002, Nasscom's survey indicates that the industry will continue to grow by more than 50 per cent annually. During 1998- 99, the software industry in India is expected to be worth Rs. 16,200 crores. Out of this, the domestic market is expected to earn Rs. 5,200 crores while exports would almost cross the Rs. 11,000-crore mark. The study also indicates that due to increased government spending towards IT in the domestic market, as well as an increase in sale of PCs, the domestic software market will fetch a record revenue of almost Rs. 8,200 crores in 1999-2000. This would be a record 57 per cent increase in the domestic market. Nasscom projects that software exports will constitute about 25 per cent of India's total exports by 2003. Currently software exports contribute to 4.5 per cent of India's total exports. The industry association also indicated a target of garnering 23 per cent of customised software market and 5 per cent of products and packages market in the global IT economy by 2003. Nasscom has also submitted a five point proposal to the Finance Minister for his consideration for the Union Budget. In the proposal, Nasscom has sought removal of procedural obstacles and suggested immediate implementation of employee stock option plan (ESOP). For ESOP, Nasscom has demanded a written clarification that income-tax is applicable only at the time of sale of stock and not at the time of the stock option offer. Mr. Mehta said: ''In order to promote indigenous software products and packages development, we have requested extending the benefit of Section 35 (2AB) of the Income Tax Act, 1961 granting 133 per cent income-tax deduction for R&D activity in computer software sector.'' The Commerce Minister had announced in 1998, his proposal to extend the tax holiday for EOU/EPZ/STP units from the present five years to 10 years. Nasscom has suggested quick implementation of this suggestion under Section 10A/10B of the Income-Tax Act. Nasscom has also proposed the implementation of a National IT Task Force proposal to scrap withholding tax on royalties and licence fees for computer software, charged under Section 9 of the Income-Tax Act. ''We want re-introduction of pre-1997 provision of allowing 50 per cent deductions from receipts of foreign exchange earnings by any company under section 80 O of Income-Tax Act,'' said Mr. Mehta. Nasscom has also demanded continuation of benefits under Section 80 HHE of the Income-Tax Act. ''Any withdrawal of these benefits could adversely affect the handsome growth of software exports,'' Mr. Mehta added. Nasscom has also demanded the Government's proactive approach in providing a beneficial venture capital environment in the country. According to Mr. Mehta, ''Quick implementation of our recommendations would mean an annual growth of 60-70 per cent for software exports and almost 50 per cent growth in domestic market for the next year.'' hindubusinessline.com