INFORMATION TECHNOLOGY

The Times of India (Delhi edition)
State of the industry
IT and ITeS export growth rates are expected to plummet due to the cut in IT spends in major developed economies and delay in decision-making cycles. Export revenue of IT services is expected to stay flat. The growth rate of ITeS is expected to decelerate to 7-8% in fiscal year 2009-10.

However, long-term prospects for the industry are promising. Continuing maturity of the global offshore delivery model, increased focus on targeting new markets and developing capabilities in emerging service lines such as infrastructure management services, and the inherent need of clients to reduce costs would together help propel growth — once the global economy recovers.

Budget Impact

The overal impact is expected to be marginally negative. The extension of the information technology tax exemption by a year to March 31, 2011, the scrapping of the fringe benefit tax and the removal of duty on packaged software, are favourable. However, the positive impact of extension is expected to be more than offset by an increase in MAT to 15%.

Tier-II players would be relatively more impacted by an increase in the minimum alternative tax (MAT) rate compared with Tier-I players.