Friday, February 19, 2010

Mr. Ashwani Sondhi, CEO, aSpire e-Travel Technologies India LLP

With Indian economy showing strong signs of having come out of recession, the forthcoming budget presents an excellent opportunity to initiate steps that shall create a suitable environment for SME sector to galvanize itself to contribute to national GDP. SME sector that has been severely hit by sluggish economy of past couple of months needs governmental support to recover. The sector is still plagued by unavailability of credit at reasonable cost. SME units in technology space are at a further disadvantage due to lack of understanding of their specific needs by the financial institutions. My expectation from the forthcoming budget would be for the Finance Minister to announce a time bound implementation of policy framework for channelizing lendable funds to the SME sector and monitoring thereof. Capacity enhancement in banking sector for technology SME would be a welcome step. Another measure desired could be giving strong impetus to CGT funding for technology startups by linking the same to priority sector funding.

At present all corporate entities whether mega large, large or SME are all taxed at similar income tax rate. Whereas the large corporate are able to enjoy favorable rate of interest and deductions under various provisions of income tax act, the SME is at a disadvantage. To strengthen the working of SME’s, a differential rate of tax could be looked at; at least for the initial years of existence. This measure shall send very strong signals for boosting confidence of SME’s.

Removal of service tax on services rendered by SME’s could be another measure to nurture the fledgling industry. The removal could be time based, with exemption available for initial years of existence.

Internet penetration and speed of internet in India are among the lowest in the world. Suitable budgetary allocation for such infrastructural development is a must. To enable larger population to access internet and the virtual world, removal of sales tax on computers and packaged software is essential.

Assignment of infrastructure status to Tourism industry would be a very positive step. Tourism industry is a growth multiplier industry and employs the largest number of people directly or indirectly. Tourism infrastructure in terms of roads, airports, tourist circuits, ports, seaways, rail roads, hotels, conventions centers and resorts needs to be developed and the budget could define the necessary framework for such investment either directly or under PPP model.
Mr. Ashwani Sondhi

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