Incentives to IT, other services export withdrawn

In a move that will adversely impact the country's services sector, the government has withdrawn incentives to exporters of IT and ITeS, telecommunication and airlines services.

The list of services eligible for duty credits under the Served From India Scheme has been pruned by removing important areas such as computer consultancy services, software implementation, data processing and database services.

Under the SFIS, exporters of services were given duty credit equivalent to 10 per cent of foreign exchange earned during the current financial year.

Apex body of exporters, Federation of Indian Export Organisations, said, "it is certainly a big setback for the services exporters, especially at a time when they were grappling with fragile global recovery".

Of about $60 billion IT and ITeS (Information technology enabled services) services, exports contribute about $50 billion and with the removal of the SFIS benefit, the bottomline of the software exporters is bound to get a hit, industry sources said.

Other services affected would include telecommunications, real estate, financial and fuel transport by pipelines.

The changes have been notified by the Directorate General of Foreign Trade, which has come out with a new exhaustive list of services eligible for SFIS.

Further, the eligibility criteria have been tightened.