Software exports raise fresh hope

andhralekha.com tells us though rattled by worldwide market meltdown, software units in the city have found a fresh hope with a study finding that the city has bright scope to emerge as tier-II destination for IT and IT Enabled Services. A study by National Association of Software and Service Companies (NASSCOM) and AT Kearney confirmed that Vizag has huge potential for investment in IT and related units. The State Government has already spelt out its priority to promote Vizag as the second preferred city after Hyderabad for investment in IT.The recession has hit the morale of the software exporters based in the city. They are looking for policy guidelines to all the departments particularly Income Tax on the definition of their deemed export status to avail of concessions and withdrawal of 12.5 per cent service tax imposed on them last year as part of a stimulus package. The study pointed out that Vizag was currently seen nascent in terms of IT BPO activity but it had the potential to attract the industry going by the balanced mix of social infrastructure, large talent pool, availability of land and the cost of living. The study on location roadmap for IT growth assessment of 50 leading cities stated that Vizag had enough potential to fuel the industry’s growth. With the local software vendors getting orders from Microsoft, Oracle, Google and others through their Indian arm, they should get deemed export status as per the foreign trade policy. "However, this benefit is not being extended by the Income Tax Department due to some communication gap,” Naresh Kumar, CEO of Symbiosis Technologies", said. The entrepreneurs want that as per the foreign trade policy, orders received for foreign clients through their Indian arms should be considered deemed exports. The tax holiday was stopped after the multinationals set up their shops in India. The reduction in payments by foreign clients due to the slump could be overcome once the government comes out with more incentives to boost the morale of the exporters, an investor proposing to set up a software venture said. With a few more incentives, Vizag would definitely emerge as an ideal destination for big players with ‘anywhere reach within 20 to 30 minutes’ advantage from Rushikonda to any prime corner in the city, he pointed out.