What is your opinion on STPI extension ? Here is a small article describing pros and cons. I am for STPI extension . Gist of the reasons for and against this move have been mentinoed here.
For
- Level playing field for domestic companies w.r.t other country competition.
- Tax advantagaes in other countries like china , irelond , chekoslavakia etc still continue. Taking out our tax sops will make us at backfoot at attracting investment in this sector.
- IT industry is not yet matured enough and still have a lot of potential for enlargement worldwide. India can claim much bigger pie in that expansion If you could provide help to the domestic IT industry.
- Recent economic recession in US is going to effect the bottom line of US tech companies adversely. This will result in a lot of cost cuttings in US which implies more BPO at a cost advantageous location. Tax sops in Inida will fasten this process. And help us in acquiring this business opportunities.
Against
- Loss of revenue to good amount.
- Comparitively less employment growth rate compared to the tax money outgoing.
Best way forward is to -- Link the tax sops to employment and export generation potential of the company.
what are the contingency plans of Information Technology industry to overcome the USA slowdown ?
- Geographic diversification to other continents - Europe, mid east, china & APAC especially.
- Project costs linked to $ fluctuations while negotiating .
- Forex currency $ - hedges
- One good thing is 29% growth in domestic sector
- Have a fresh look at emerging markets.
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