Indian software and services exports, that were expected to grow between 30 and 32 per cent this fiscal, are on course to cross the targeted percentage.
According to Kiran Karnik, president of National Association of Software and Services Companies (Nasscom), growth of software and services exports in the Indian scenario may even touch the 35-per cent mark by the end of 2004-05.
Speaking on the sidelines of a CEO networking dinner with Nasscom's executive council members, Karnik said, "We had expected the Indian software and services exports to grow between 30 per cent and 32 per cent this fiscal. But we are happy to announce that the exports are likely to touch even the 35-per cent mark."
"In fact, new cities like Visakhapatnam, Chandigarh, Jaipur and Kolkata too are becoming new destinations for IT and ITeS services. Wipro, Satyam and TCS are a few companies that are looking at Visakhapatnam as a potential city for their growth plans," he added.
"This apart, there are opportunities for better collaboration between India and China in these sectors as well," Karnik said.
"In the last one-and-a-half years, the IT and ITeS sectors have also been focussing on issues like information security, talent quality and infrastructure. Other sectors, however, have now started to look as glamorous as these and we therefore need to work harder to maintain the momentum in growth," he added.
Karnik also sounded optimistic on touching the Indian software and services export target of $50 billion by 2009.
Commenting on the fringe benefit tax, Karnik said that they have made representations to the government in this regard and modifications are likely to take place in the tax structure although it may not be totally withdrawn.
"We have told the government that fringe benefits are basically for the welfare of the employees. So, if these perks are taxed then the government is sending a wrong signal to the employers by indirectly asking them to avoid giving such benefits," he added.
Giving his view on whether the value added tax (VAT) would affect the Indian IT hardware industry in a major way, Karnik said that there have been concerns from a few quarters in this regard.
"VAT may not have a major impact on this sector. There may be some issues, however, because of lack of uniformity in the implementation of VAT across the country," he added.
Karnik also said that the VAT regime has opened up a plethora of opportunities for software companies to design products and solutions for enabling VAT compliance.
Karnik said that he was not very excited about the idea of setting up a fab facility in India.
"If the facility is set up in India, it is good. But I am not very excited about this as due to the zero duty regime, the origin of manufacturing of chips will not affect the pricing in any way. Also, it is not necessary that the facility may employ a huge number of people and therefore benefit the economy in a major way," he added.
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