Kerala CM moots for restoration of STPI scheme to revive IT

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Trivandrum: Kerala Chief Minister, Shri Oommen Chandy has proposed to the Prime Minister of India for the restoration of the Software Technology Parks of India (STPI) scheme for the revival of the IT industry in the country.

In letter addressed to PM, the CM said that the Central Government should consider the revival of the scheme for a period of five years effective from the current financial year, at least to those units in tier 2 and tier 3 cities to help companies tide over ‘the immediate crisis’.

The representation follows the meeting of GTech members with the Chief Minister last week. GTech, the industry body representing the IT industry in Kerala, had represented to the CM that discontinuance of the scheme was the single biggest setback facing the small and medium companies.

“In one stroke, the Government of India can rejuvenate the sagging fortunes of Indian IT units in the SME sector. IT industry is the largest employer in the private sector with over 30 lakh people employed directly and another 95 lakhs gaining indirect employment. Not only will this game changing initiative ensure creation of more jobs, but it will also see IT companies flock to smaller towns and cities thereby decongesting the metros”, said V K Mathews, Chairman, GTech.

GTech’s case is that over 60% of the entire spending of software companies relate to employee salaries which are taxed and hence the contribution to the exchequer remains significant. The industry body reasons that additional levy in the form of corporate tax leaves very little for IT units in the SME sector to re-invest, increase headcount and grow, something which is absolutely critical to remain globally competitive. Apart from a no tax policy on exports, the STPI scheme empowers IT units to operate without any geographical restrictions, unlike the SEZ scheme.

“STPI scheme was a key contributor to the success of the Indian IT industry in its infancy. While some companies have outgrown the need for this scheme, there remain a large number of IT units for which the discontinuation of the scheme in 2011 has dealt a body blow. The current global economic melt-down has added to the woes and hence a strong case exists for the restoration of STPI scheme for the units in the tier 2 and tier 3 cities in India” said Anoop P Ambika, Secretary, GTech.

This is the second time (in 13 months) that Kerala CM is writing to the PM on this. It may be recalled that the Karnataka Chief Minister had raised the same demand last week and also West Bengal CM had raised this demand last year.

Kerala IT News

Note: Photograph for illustration purpose only

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