GTech seeks restoration of STPI in smaller cities

Published: 01st October 2013 10:24 AM  |   Last Updated: 01st October 2013 10:24 AM   |  A+A-

Group of Technology Companies (GTech), the trade body representing the IT industry in the state, has approached Sonia Gandhi for the restoration of the Software Technology Parks of India (STPI) scheme in tier II and tier III cities in the country.

GTech chairman V K Mathews met Sonia Gandhi at the Raj Bhavan here on Monday and apprised her of the critical need to have the scheme restored to prevent potential job losses on a massive scale in the IT industry, especially in the SME sector, which Kerala is depended on.

The representation handed over to Sonia Gandhi speaks of the restoration of STPI benefits as the single biggest requirement of the Small and Medium Enterprises (SME) IT companies across the country and how, by doing so, the Union Government can, in a single stroke, prop up the sagging fortunes of an industry that is the largest employment provider in the private sector. The IT industry employs over 30 lakh people directly, with another 95 lakh gaining indirect employment. Sonia Gandhi was apprised of the challenges facing the Indian IT SME companies in a fiercely competitive global market.

Fund shortage for expansion was one of the critical concerns and the withdrawal of STPI benefits has dealt a body blow to small companies, the memorandum said. The profits earned from exports are reinvested to attain scale and if corporate tax is levied, it would deprive IT SME companies of financial means to fund growth, something which is critical to stay afloat.

It was pointed out that the IT industry contributed significantly to the government exchequer, as over 60 per cent of their expenses pertain to employee salaries.

It was also clarified to Sonia Gandhi that the benefits of restoring the STPI Scheme to IT companies in the tier II and tier III cities far outweigh the negatives.

“Only 10 per cent of Indian IT exports are from tier II and tier III cities, hence its restoration will have a negligible impact on tax collection. However, it will ensure protection of employment to tens of thousands of youth in the country and will go a long way in decongesting cities and enhancing rural employment,” Mathews said.

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