ESC urges govt to extend tax benefits to SMEs

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SME Times News Bureau | 14 Feb, 2012
Electronics and Computer Software Export Promotion Council (ESC) wants the government to extend tax benefits to small and medium IT firms on par with those given to major companies in Special Economic Zones (SEZs).

With the withdrawal of Software Technology Parks of India (STPI) scheme last year, the SMEs lack incentive and are yearning for IT benefits on par with SEZs.

"SMEs need help in the form of tax benefits and we are demanding that the benefits enjoyed by big firms in SEZs be extended to them," ESC executive director D.K. Sareen told reporters here Monday.

He felt that such benefits would give a big boost to the exports by SMEs. According to him, 80 percent of the IT exports are contributed by top 200 companies while the remaining 20 percent are contributed by 2,300 firms.

The government of India sponsored organization is positive on its outlook for the next financial year. "With the positive indications from the US, the IT industry can look forward for healthier growth," he said.

"We are on a springboard. We have great resources, manpower, physical infrastructure, ideas and all other required ingredients," he added.

ESC expects 22.47 percent growth in IT exports during 2011-12. The total exports are projected at $77 billion. Of this, $68 billion will be computer software and services and $9.2 billion electronic hardware. By December, 2011, the country had achieved 70 percent and 80 percent targets in software and hardware respectively.

In rupee terms, the growth in electronic hardware is expected to be 10 percent and in software 24.38 percent.

The IT exports during 2010-11 were $66 billion, comprising $8.86 billion hardware and $57.61 billion software.

The United States continued to be the biggest market for Indian IT exports though its share has come down to 56 percent from the earlier 62 percent. European Union is the second biggest market, accounting for 22 percent exports.

Sareen said Japan, which is the second largest software market, accounts for only three percent exports from India and hence there is tremendous potential for growth. He also sees huge potential for promoting exports to other emerging markets like Africa, which currently accounts for four to five percent exports.