Nasscom's Reaction on Budget

NASSCOM and the IT-BPO industry welcome the fact that the Union
Budget is inclusive and has a strong focus on the social sector.

NASSCOM
is however disappointed with the absence of any discussion on the
extension of the STPI scheme. This is extremely critical for small
enterprises and the BPO industry, as well as for expansion in tier 2
and tier 3 cities as they are unable to avail the benefits of the SEZ
scheme. The STPI benefits are available till March 31 2009 and we are
hopeful that through continued dialogue we will be able to convince the
Government to consider our proposal and help India garner the large
opportunity in this sector.

We have seen the advantage of IT
deployment in the country. However the imposition of service tax of 12%
on customised software and higher excise duty on packaged software
could lead to increased cost of IT and could slow down the IT usage in
the domestic sector. This impacts in particular, small and medium
enterprises who have just started deploying IT.

The
IT-BPO industry is talent and skill intensive and in this light, we
particularly welcome the thrust on primary and higher education and
skill building initiatives. The Sarva Shiksha Abhiyan1, increased allocations for higher education2 and the creation of the Skill Development Mission3 with
the announcement of Rs. 1,000 crore as Government's equity in this
proposed non-profit corporation will ensure constant supply of
employable workforce to this sector. Interconnecting the knowledge
institutions through broadband would also establish synergies across
educational institutions.

We are happy with the
new initiatives on setting up rural service centres and state data
centres as they would help take the benefit of IT to the masses.

While
the Budget does resolve some existing anomalies, we would continue our
dialogue with the Government on removing the inequities and procedural
issues such as those relating to provisions of Section 10AA for units
in SEZ, advance pricing agreements etc.

1Sarva
Shiksha Abhiyan (SSA) will be provided Rs.13,100 crore; The focus of
SSA will shift from access and infrastructure at the primary level to
enhancing retention; improving quality of learning; and ensuring access
to upper primary classes. A Model School programme, with the aim of
establishing 6,000 high quality model schools, will be started in
2008-09. I propose to provide Rs.650 crore for the new scheme.

2Knowledge
is power. It is knowledge that will drive success in the 21st century.
India has the opportunity to become a knowledge society. Following the
Prime Minister's announcement, an IIM at Shillong; three IISERs at
Mohali, Pune and Kolkata; and an IIIT at Kanchipuram have started
functioning. Government will establish one Central University in each
of the hitherto uncovered States. We propose to make a beginning in
2008-09 by establishing 16 Central Universities. Besides, we propose to
set up three IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs at
Bhopal and Tiruvananthapuram; and two Schools of Planning and
Architecture at Bhopal and Vijayawada. More institutes of higher
education, as promised by the Prime Minister, will be established
during the Eleventh Plan period

3However,
there is a compelling need to launch a world-class skill development
programme, in mission mode, that will address the challenge of
imparting the skills required by a growing economy. Both the structure
and the leadership of the mission must be such that the programme can
be scaled up quickly to cover the whole country. Hence, I propose to
establish a non-profit corporation and entrust the mission to that
corporation. It is my intention to garner about Rs.15,000 crore as
capital from Governments, the public and private sector, and bilateral
and multilateral sources. I shall begin by putting Rs.1,000 crore as
Government's equity in the proposed non-profit corporation.