The Union Budget and the initiatives announced by Finance Minister P Chidambaram are now passe...not quite! The IT SME sector for one, who feels left out, is still fuming red!

"We are extremely displeased with this year's budget. Despite the major contribution made by the IT sector to India's growth story, the government still does not consider us to be a vital sector". This was stated by Mr. C P Kummar, Accounts Manager and Media Incharge at IT SME Association in a telephonic conversation with tradeindia.com from Chennai.

IT SME, initially started as an informal forum dedicated to the interests of the Small and Medium Enterprises in IT and became a fully registered association under the TN Societies Act in September 2007. This association evolved from a series of meetings among SME companies conducted on a monthly basis for close to a year with able support from the STPI Director's office.

Mr. Kummar could not hold back his emotions when he said, "Mr. Chidambaram has completely forgotten the IT sector. For a moment there was a general feeling amongst the IT industry circles that the FM has even failed to recognize that we exist".

As a result of this decision "the IT industry is going to lose out on a massive scale and the software industry will lose its credibility more so those companies operating in the IT SME segment as they operate on thin margins," he further said.

Mr. Kummar pointed out that IT stocks have already started tumbling in the bourses and if rectifying measures are not adopted by the government, job losses would become the order of the day.

"The Communist Party of China (CPC) provides so much of support to its nascent IT industry. This explains why it has been narrowing the gap with India in terms of IT software exports". On the contrary our government is hell bent on "killing the domestic industry," Kummar said, rather dejectedly.

"Why did the government waive loans to the tune of Rs. 60,000 crore to the small and marginal farmers? Is this the right strategy and does it send out the right signal? This (loan waiver) will create a feeling amongst all farmers that they can get away by not repaying," Mr. Kummar said.

Mr. Kummar was particularly livid with the government's decision not to extend the Software Technology Parks of India (STPI) scheme beyond 2009. "Some of the small firms are considering moving away from India if this scheme is not extended."

Malaysia, which has a scheme called Multimedia Super Corridor scheme similar to the STPI scheme in India, is attracting IT companies on a massive scale. Recently companies such as Buzznet from Chennai have already taken flight to greener pastures there.

In this regard he said that, "If urgent steps are not taken we will witness a greater exodus thereby bringing the IT industry in India to its knees."

STPI promises tax holidays to the IT companies, specially important for the Small and Medium IT companies who cannot afford the high leasing costs of SEZs. "The IT SMEs are in dire straits" Mr. Kummar said adding that there is still hope for the sector and certain sops may be provided to the IT sector in general and the IT SME sector in particular before the end of this fiscal.

Mr. Rajeev Mehta

(Tradeindia Expert)

Mehta Stores

Managing Director, Mehta Stores
New Delhi, India