STPI - Does it really impact indian IT services?

Monday, March 1, 2010

One of the expectation from the Indian IT industry is that STPI incentives provided to Indian IT industry continue beyond 2010, so that Indian IT industry is on the winning path against the competition from China, Brazil and Egypt.

There is no denial of the fact that, continuation of benefits are important for continuous growth, more importantly I feel it going to impact only small or medium sized IT companies. Bigger IT companies (tier 1) can still reap benifit by moving their operation to SEZ (Special Economic Zone).

However, one question which I fail to get an answer is that, how is the government going to tag a software product/services whether it is produced in SEZ or not?. With improved communication facility a software services can be developed/services provided at any place, including your home. Just for sake of it, IT companies can have office at SEZ and continue to reap benifit stating that they operate from SEZ, unlike manufacturing, physically tagging the development/product is not possible or it is going to be very difficult.

Hence I believe its going to be business as usual for bigger IT player and only smaller companies would find it difficult, as they need to have some physical presence at SEZ.

Again this is just out of my own thoughts, if any of the reader have better insight please comment.

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