August 1998                                                                      FRONT END    

Masterfile

Country Buzz

Computer
Business

PC User

Offline

Telecomment

Online

The Circuit

The National IT Task Force prescribes 108 measures to bring in IT for all by year 2008.

By Ramesh Kumar

Infotech is onto centrestage, at last. The fragile BJP-led coalition government managed to initiate changes without causing any ripples among its partners. Probably, infotech is a politically safe area to navigate with no room for dissent. The high-powered National Task Force on Information Technology and Software Development, set up on 22 May under the chairmanship of Planning Commission's deputy chairman Jaswant Singh with a tight deadline, presented its first Action Plan on 4 July to the Prime Minister.

The Task Force's prescription (see box), consisting of 108 recommendations encompassing the various aspects of the infotech industry, was promptly referred to a four-member, senior ministerial committee for vetting in ten days. Setting up committees and receiving recommendations are routine government affairs. What is remarkable is the quick response. Utilising the Finance Bill which was under discussion in Parliament in July, the government quickly announced changes, sending the industry into euphoria.

The Tonic of Sops

The government's tonic for the infotech sector in the form of tax concessions included:

• widening of computer software definition by including transmission of data communication;
• extending the benefits of Section 80 HHE of the Income Tax Act to supporting developers;
• exemption of customs duty on all software used in IT sector, withholding tax on royalty payment for data transmission and external commercial borrowings, gifts of computers to educational institutions, hospitals and government bodies imported under 100 percent EOU/ETHP/STP/EPZ schemes;
• removal of gift tax on computers;
• raise depreciation on IT products to 60 percent.

Expectedly, the infotech industry's cup of joy is overflowing. The slew of tax concessions will help companies to improve their bottomline through increased turnover. Jubliant exporters are already forecasting $2.7 billion build-up this year. Low-cost PC vendors are expecting a sales boom following the removal of gift tax on computers with the single-owner home office concept taking off in a big way. Hardware manufacturers foresee a sharp increase in the corporate demand due to the hefty increase in the depreciation allowance.

Target Meet Before Time

Despite the rumblings within and the stauch swadeshi credentials, the government is ready to meet its commitment to the World Trade Organisation two years ahead of schedule. Against the original commitment to achieve zero level duty on IT products by 2005, now India will achieve it in 2003, a signal of its desire to be in the global community. A cross-section of industry representatives recall such a pro-IT industry tinge was visible only during the early days of Rajiv Gandhi's regime. While conceding the contribution made by the Narasimha Rao government in ushering in a new economic order, veterans could not recollect its IT-friendly policy initiatives during this period.

"It is very easy to get carried away by the initial euphoria. There are miles to go before India achieves the super stardom in the software arena," cautions R. Venkatesan, senior economist at the National Council of Applied Economic Research. He is more concerned about policy implementations which, according to him, should be transparent and unambiguous. This is a major area of concern because the past efforts to give a fillip to infotech got bogged down due to bureaucratic hurdles.

Issue Contents    Write to us    Subscriptions    Syndication

© Living Media India Ltd