Bada Din comes late this year for Indian outsourcers: the Indian STPI tax holiday is extended

Holiday_4The Indian Government has clearly been reading this blog and bowed to our pressure to extend the Software Technology Parks of India (STPI) tax holiday.  The Indian finance minister has now proposed to extend the  STPI tax holiday to expire on March 31 2010, a year later than the originally stipulated March 31 2009 date. 

This is a shot in the arm for the Indian offshore services sector, and the shares of Infosys, Wipro, TCS, Cognizant, WNS, Patni, Satyam, EXL Service, Genpact et al. are all expected to jump by up to 10% as a result.  The additional year should give the Indian outsourcing industry the time it needs to stabilize its current issues with Rupee appreciation and wage inflation.

Thanks to all you for you great contributions on this issue.

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3 Comments

  1. Senthil
    Posted April 30, 2008 at 12:45 am | Permalink

    Dunno whether Indian governement is reading this blog :) , but I can assure you that hectic lobbying had gone behind this announcement. And also more than the biggies like TCS, Infosys, Wipro, Satyam and HCL it is the small and medium companies in Indian IT scenario who would be more happy with this anouncement. Biggies too would stand gained under the same sun, though they had built enough capacity in the so called Special Economic Zones (SEZ’s)to negate the tax impact on thier businesses. Overall a good news for the industry and sector in the sub-continent.

  2. Posted May 1, 2008 at 6:16 am | Permalink

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  3. Subir Dhar
    Posted May 10, 2008 at 3:02 pm | Permalink

    Hi,

    Its a temporary relief that the STPI scheme has been extended by an year.

    The industry wanted the scheme to be extended for many more years, but good sense prevailed and hopefully it will come to an end in 2010.

    The positive impact of this sunset clause – Indian IT industry will have to focus more attention on innovation and productivity. It will also push the Indian IT service providers to focus their attention on the local Indian markets.

    Till now, as the exports were tax exempted (and paradoxically, the revenues from Indian ops were to be taxed) – the impact of IT on Indian business environment had been negligible. Hopefully, the things will change for the better.

    Regards

    Subir Dhar
    Bangalore
    India

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