Pre- Budget expectations from Mr. P. Venkatesh, Director – Product Division, Maveric Systems:
The debate on the rationale to continue with concessions associated with economic zones has been there for over 5 years now. What should the government do to resolve this? Review the facts and make a firm and final decision.
In my opinion, the Government needs a continued generation of foreign exchange in the current account, in order to close the trade gap. Additionally, they need to have an engine for employment generation so that the social costs of providing benefits come down. Finally, the Government needs to improve the brand image of the country in the global scenario so that it remains a destination for investment, travel and business collaborations.
The IT industry has served these needs better than any other industry segment, over the last twenty five years. Therefore it is important that the government support the IT industry and heed its needs.
There is therefore a need to continue the benefits of SEZ/STPI, and this includes reversing the levy of minimum alternate tax for profits from such units.
GST implementation has been delayed for too long. It would be wise move ahead with its implementation given that the domestic IT market is growing at 20% plus in the past few years and is likely to continue this way in the near future.
In addition to this, implementing the Shome Committee recommendations on the safe harbour, tax roll back, and retrospective amendments to fiscal legislations will have a positive change overall.
There are a number of mid-size IT companies that need support in terms of funding-credit lines for working capital, as well as equity for growth. Conventionally, banks have been reluctant to extend the export financing schemes, packing credit and post-shipment credit facilities to this segment; it is time that this gets clarified. Also, deepening and widening the SME segment of the stock exchanges will give these mid-sized companies access to capital for growth. Finally, providing tax breaks for mutual funds, venture funds and financial institutions investing will enable this segment to grow.