ITsAP Delegation meets Hon Chief Minister on Industry Issues

ITsAP Delegation meets Hon Chief Minister on Industry Issues

June 25, 2010

A delegation from Information Technology (IT) and Information Technology Enabled Services (ITES) Industry Association of Andhra Pradesh (ITsAP) comprising

1. Mr. L Suresh (President, ITsAP)
2. Brig. Hari Kumar (Executive Director, ITsAP)
3. Mr. V Rajanna (Vice President, ITsAP)
4. Mr. JAChowdary (Past President, ITsAP)
5. Mr. Bipin Chandra (Secretary, ITsAP)

met Dr K Rosaiah, Honourable Chief Minister of Andhra Pradesh along with the Minister of IT Mr K Venkat Reddy and Mrs Ratnaprabha, Prinncipal Secretary – Information Technology in CMs chamber on June 25, 2010.

The ITsAP executives brought some of the key issues to be addressed immediately in order to leverage the potential for growth of IT & ITES sectors and take Andhra Pradesh to the next level. The key issues that were brought to the notice of Chief Minister are:

• Levy of Value Added Tax (VAT) on services provided for domestic customers and hence the Industry is paying the double tax, i.e., VAT & Service Tax, the only issue in Andhra Pradesh. VAT should be levied on license software and service tax should be levied on services. CM directed Chief Secretary to get this issue resolved immediately.

• Small-Medium Businesses (SMB) contributes to 21% of IT & ITES revenues in AP & 33.6% of Employment. SMBs are not able to bid for government projects due to stringent terms and conditions. In order to promote SMB businesses further, ITsAP proposed 10% of government business to be awarded to SMBs. This will attract companies from other states to come and set-up operations in AP. Mrs Ratnaprabha indicated that she received a similar note from GOI and she promised to look into this.

• Because of STPI scheme getting sunset in March 2011 and if it is not extended beyond March 2011, its extremely difficult for SMBs set-up shops in SEZs due to very high rentals. Also, as per SEZ norms, one can’t move the existing business from STPI to SEZ. In view of this, ITsAP requested Hon. CM to provide space for SMBs at subsidized rates.  ITsAP also requested Hon CM to send a recommendation for favorable extension of STPI scheme beyond March 2011. Hon CM promised to send a note immediately and also discuss this issue during PM’s visit to AP in July. Mrs. Ratprabha will look into setting-up a separate SEZ for SMBs at the earliest.

• Though AP today is one of the most preferred destinations for IT & ITES outsourcing, the cost is increasing day-by-day in Hyderabad and hence we need to look at Tier II cities including Warangal, Vizag, Vijayawada, Kakinada, Tirupati, etc In order to attract companies to set-up shops in Tier II cities, ITsAP strongly recommended to come-up with aggressive preferential policies for Tier II cities.  Hon CM assured that this will be addressed as part of forthcoming IT Policy in July.

Commenting on the outcome of this meeting, Mr L Suresh, President, ITsAP said that Hon CM was very responsive to the suggestions made by ITsAP and we are very much hopeful that these issues would be addressed at the earliest. Andhra Pradesh must be aggressive and leverage the great momentum of growth opportunities in IT & ITES sectors, added Suresh.