Sibal sees IT revenues at $300bn by 2020, mulls tax sops for IT firms

October 10, 2011

Minister of Communications and Information Technology, Kapil Sibal, released the Draft National Policy on Information Technology, and said that Information Technology is a key driver of an increasingly knowledge based global economy.

Given its current global position in the IT and ITES sector, India is well positioned to enhance and leverage its existing IT capabilities for a leadership role, he said.

The Minister further said that the technology has transformational power, and it is a great leveler of opportunity within and across economies. With the right policies and investment in infrastructure, he said, we have the opportunity to strengthen and enhance our position as a global IT power-house. On the domestic front, use of IT in all sectors can transform our economy, enhance equity and help the nation to rapidly improve its development indices.

Sibal highlighted that the draft National Policy on IT 2011 envisages to increase revenues of IT and ITES Industry from 88 Billion USD at present to 300 Billion USD by 2020. In this context, he underlined the significant contribution of the IT Sector to the growth of Indian economy over last decade which registered a growth rate of 8 per cent. Since, of a USD 88 Billion IT industry in 2010-11, 80 per cent of the revenues comes from exports, the Policy proposes to encourage growth of indigenous demands and market. The proposed Policy also aims at formulating fiscal and other incentives to attract investment in this sector in Tier II and Tier III cities.

The Indian IT and ITES sector currently employs over 2.5 million skilled people and has been one of the major employment generators in the last two decades.

The focus of the IT Policy is on deployment of ICT in all sectors of the economy and providing IT solutions to the world. The National Policy on IT aims to strengthen and enhance India’s position as the Global IT hub and to use IT as an engine for rapid, inclusive and sustainable growth in the national economy.

The Policy aims to maximally leverage the power of ICT to help address the monumental economic and developmental challenges the country faces.

Kapil Sibal also said, India will consider giving tax sops for information technology companies after the direct tax bill comes into affect.

India is trying to pass a bill in parliament to overhaul its archaic direct tax laws, a key reform aimed at simplifying procedures for investors and bring in more revenue by widening the tax net.

A spurt in tax rates due to expiry of the Software Technology Parks of India (STPI) scheme earlier this year has hurt margins and crimped profits at Indian IT firms.