Kiran Karnik, president of National Association of Software and Service Companies day hinted on Thursday at a possible slowdown in the momentum of India's information technology exports after 2010,due to the recent tax impositions on the sector.
"We will meet our current export targets but there might be a slowdown after that," Karnik told reporters on the sidelines of a panel discussion organised by Executive Recruiters Association in New Delhi on Thursday.
According to a recent study commissioned by Nasscom, India's IT-IteS exports are expected to cross $31 billion in the current calendar year and is expected to exceed $60 billion by 2010. According to the recent Budget, IT industries have been brought under the minimum alternative tax bracket.
Employee Stock Option Plans, very popular with IT companies, have been brought under the purview of fringe benefit tax.
"ESOPs are a means of attracting and retaining talent in the IT industry. The move to tax them will definitely affect the smaller companies," he said.
In a statement issued by Nasscom post-Budget, Karnik had said they were 'dismayed' at the proposal to extend MAT on export incomes, which were exempt under Sections 10A and 10B.
This move could "affect investor confidence and growth in this sector which is not only India's biggest exporter ($31.6 billion in 2006-07) but is the biggest employer in the organised private sector," he added.
On the issue of the recent department of telecommunication order to close down 'illegal' BPOs and call centres, Karnik said the issue pertained only to the unregistered call centres but exhorted the government to give them more time.
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