The IT industry has thrived thanks to policies such as creation of SEZ zones. If the government wants to continue to attract private investment and create jobs, the benefits given to SEZs must continue, feels Krishnakumar Natarajan, Chairman, Mindtree.
In a notification dated 2018, the government had said that the SEZ will lose the direct tax benefits in four years’ time. In Budget 2018, then Finance Minister Arun Jaitley proposed to abolish all direct benefits for SEZs operationalised after March 31, 2020.
SEZs enjoy several incentives such as direct tax benefits and single window clearance.
“If the SEZ policy is changed, then people will then hesitate to any new investments,” said Natarajan.
While Natarajan refused to make any comments on the ongoing Mindtree-L&T tussle, he shared his views on the industry’s needs.
“In terms of policy, while people say that the IT industry has had tax benefits and so on, it resulted in huge number of job creation. I would say it created three million direct jobs and nine to 10 million indirect jobs. To that extent the policy machine should continue to support the SEZ scheme. Because a lot of it comes back in terms of benefit to enhance job creation, CSR activities. At the current juncture when job creation is a key thing, I think the government should do everything to get in private capital, which is clearly the growth and economic engine,” he added.
Natarajan further added that given most IT firms generate enough resources to invest, they not only create direct jobs but also indirect jobs.
“For every one direct job in IT, three indirect jobs are created. I think there is a cascading impact both on job creation and overall economy,” Natarajan pointed out.
Natarajan further explained that “also it (SEZ benefits) is not entirely loss making proportion for the government. So seriously the government should think the government should think of extending schemes like SEZ so that the job creation is really the key part of the IT industry can get reinitiated now”.
Apart from the SEZ, Natarajan said there should be focus from government on using technology to enhance the quality of life.
“There is a need for investments in the latest technological advancements such as 5G, AR/VR, quantum computing and artificial intelligence that are consumed at a much faster rate. Failing which India will lose out. The government should make sought out steps in terms of investments in technology, how do we grow talent in the area and start applying them in industry,” he said.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.
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