Ponnala to urge Centre to extend tax holiday for STPIs

Hyderabad, March 21 (INN): Minister for Information Technology Communications Ponnala Lakshmaiah assured a delegation representing about 150 IT firms that he would take up their demand for an extension of the tax holiday for STPIs or recognize the IT industry as part of the Special Economic Zones.

Mr Lakshmaiah's assurance to the IT industry representatives, who met him under the aegis of IT Serve Alliance, a USA based association formed for preserving and protecting the needs of the USA based IT firms, came during a meeting held in Dallas, Texas Sunday, March 20.

The IT Serve Alliance, an association with 150 IT firms, has been formed to protect the interests of the IT Industry. IT Serve Alliance president Satish Mandava told Mr Lakshmaiah that the STPI Tax holiday has expired with 2010 ' 11 and it needs to be extended by at least another 3 years as most of the IT companies derive benefit through this feature.

If this is not feasible, the STPI firms need to be recognized as part of SEZ. Mr Mandava also said that the small and medium sized firms need to be given a due share in the SEZs by allocating a fair share of space. The space recovered from the built up SEZs may be allocated to the SMEs for immediate occupation.

The IT Serve Alliance also pointed out that the IT Services industry is currently protected under Essential Services Act in Andhra Pradesh. He said that IT Serve Alliance would like the Government of India to declare the IT Services as Emergency Services to avoid disruption of services to the US Clients especially during times of regional political tribulations.

The IT Serve Alliance also sought that land may be allocated for constructing an IT Services Corridor represented by 100 per cent EOU (Export Oriented Units) Firms, besides creation of a diplomatic liaison office to involve and resolve matters like the Tri-Valley State University, H1B visa issues at the consulates.

The IT Minister immediately agreed to take the representation to the Ministry of Information Technology, Government of India and Ministry of External Affairs, Government of India and also Ministry of Commerce, Government of India for ensuring the requests from the IT companies are taken up seriously.

Mr Lakshmaiah has also called up the officials of the Government of Andhra Pradesh immediately and asked them to go through the requests of the industry and streamline the feedback for taking it to the Government of India immediately on return of the Minister to India.

These 150 member companies have a total turnover of US $750 Million per year (Rs 3,500 crore per year) with employee strength upwards of 7,500 in the USA. The companies are located mostly in the Southwest, Southeast and Midwest regions of the United States.

With regards to the Indian context, 90 per cent of the companies perform back office operation from India and majority of these companies have presence in India. About 40 per cent of these firms have software development divisions supporting products as well as strategic solutions.

Currently, the member companies of the IT Serve Alliance occupy over 300,000 SFT in Hyderabad, Visakhapatnam and Bangalore with a majority representation in Hyderabad. The Indian operations of these companies employ over 15,000. All these companies are either registered with STPI or operating in an SEZ.