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Incentivize IT services sector, manufacturer-exporters to raise exports and investment: ASSOCHAM

New Delhi, Sept 10 (KNN) Industry body Assocham has suggested that the Commerce Ministry re-engineer the trade policy by incentivising existing manufacturer-exporters to increase investment and provide fiscal incentives to micro, small and medium manufacturers as well as exporters.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a written letter to the government has urged it to provide incentives for information technology (IT) services sector in the country to boost their exports.

“IT services companies providing development, system integration services to overseas clients and captive development, testing or services centres can be incentivized by modifying export incentive regimes,” said secretary general of ASSOCHAM, D S Rawat.

“Besides, multinational IT corporations may also be encouraged to locate development centres in India and scale-up their existing presence by providing targeted incentives.
“India’s IT services sector witnessed 4.2 per cent growth in 2012-13, while our competitors in the sector like Russia and Philippines grew at a massive 69 per cent and 27 per cent respectively, the distinct slowdown in the sector may be attributed to sluggish economy but in face of noticeable increasing competition from abroad, it is imperative that IT industry be incentivized towards increasing its export growth,” ASSOCHAM said in a letter to commerce minister Anand Sharma.

ASSOCHAM has also proposed that incremental export incentive scheme be extended to software services sector to encourage businesses that could re-locate to India or scale-up their presence here, while considering the sub-serving national priority of reducing current account deficit (CAD) by increasing exports.

It also suggested that fully tradable scrip of value equal to seven per cent of incremental exports over and above the previous year be granted, which could be used for payment of any customs duty and the scheme should be extended for a five-year period.

Stating that Software Technology Parks of India scheme (STPI) has lost its charm with the income tax benefit being withdrawn from 2011 onwards, the chamber stressed upon the need to attract new IT services organisations.

The business chamber also suggested combining a few schemes to reduce complexity in the export-import policy.

Highlighting that India could become a hub for repair and re-manufacture of factory refurbished goods owing to availability of low-cost skilled labour, Assocham proposed that the policy in this regard be suitably amended.

At present, the export-import policy restricts import of used goods while the process of applying for their import license is also cumbersome.

According to estimates, India's share in trade of such goods has been less than USD 10 million while that of the US and European Union was to the tune of about USD  20 billion till a few years ago.