Wednesday, February 13, 2008

Special package for IT, BPO industry in Budget

Union communications and IT minister A Raja said his ministry is asking for a dedicated incentive package for the Indian IT and BPO industry in the forthcoming budget and for the continuation of tax holiday benefit under the software technology parks scheme. “We have received feedback from the industry players for the continuation of the STPI scheme.

The scheme’s fiscal incentives, for instance, are being treated on a priority basis by the ministry of communications and IT and we’re extensively following it up with the PMO on this,” Mr Raja said at an industry meet organised by trade body Nasscom. The minister also said continuation of tax benefits would particularly benefit small and medium enterprises, most of which can’t cash in on the special economic zones.

Mr Raja also touched upon the spectrum allocation issue on the sidelines of the meeting. He said that the government won’t lower spectrum pricing but it would be left to competition to determine whether price is to be hiked or reduced. The Wireless Planning and Co-ordination Wing of the Department of Telecom (DoT) has proposed levying one-time fixed spectrum charges for additional spectrum of 1 MHz for Rs 2 crore, 1 crore and Rs 0.35 crore for categories A, B and C circles, respectively, against telecom regulator Trai’s recommendations of Rs 16 crore, 8 crore and 8 crore, respectively. Currently, operators have been paying in the range of 2-6% of their annual gross revenues (AGR) for 4.4-15 MHz of spectrum.

The minister said the ministry was ready to submit the amended IT Act in the next Parliament session. “Cyber security is another area where the industry must look to consolidate its position. In order to consolidate industry’s global edge, we have to strengthen our IT Act and give it more teeth. Amendments to the current IT Act are being finalised by the ministry,” Mr Raja said.

Mr Raja also voiced a need for providing cheaper bandwidth to broadband operators for enabling better connectivity in rural India. “Rural connectivity is still a dream for almost 80% of India’s population. Our goal is to provide rural citizens with access to state-of-the-art technology devices and internet at lower prices.

For that to happen, bandwidth has to be made even cheaper and reasonably priced telecom solutions must reach the common package,” Mr Raja said.

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