IT and BPM

SUMMARY

• IT-BPM sector accounts for the largest share in total Indian services export (45%).
• IT-BPM sector accounts for 56% of the total global outsourcing market.
• 640 offshore development centres in more than 80 countries.
• Indian IT & BPM industry is expected to grow to USD 300 billion by 2020.
• IT-BPM sector constitutes ~ 9.3% of India's GDP.
• IT-BPM is the largest private-sector employer - delivering 3.7 million jobs.

FINANCIAL SUPPORT

PROVISIONS OF THE 2015-2016 UNION BUDGET:

• The tax rate on royalty and fee for technical service payable to non-residents has been reduced from 25% to 10%.
• The National Optical Fibre Network Programme (NOFNP) to be further speeded up by allowing willing states to execute on reimbursement of cost basis as determined by the Department of Telecom.
• Supporting technology-driven start-ups - Creating of innovation Promotion Platform and Techno-financial and facilitation support scheme
• Self-Employment and Talent Utilization (SETU) to establish as techno-financial, incubation and facilitation programme to support all aspects of a start-up business.
• Transfer Pricing - Increase in Domestic Transfer pricing threshold from USD 769,230 to USD 3.07 million.
• Reduction in the tax rate on Royalty and Fees from Technical services from 25% to 10%
• CENVAT credit time limit for availing increased from 6 months to 1 year.
• General Anti-Avoidance Rule (GAAR) deferred by another two years and will be implied prospectively.
• 2 days’ time for service tax/ excise duty registration; electronic filing including a digital signature.
• Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of USD 3.07 billion, and credit guarantee corpus of USD 461.53 million aiming to infuse funding among the new generation entrepreneurs.

INVESTMENT OPPORTUNITIES

• The setting up of IT services, BPM, software product companies, shared service centres.
• Fast-growing sectors within the BPM domain – knowledge services, data analytics, legal services, Business Process as a Service (BPaaS), cloud-based services.
• IT Services and fast-growing sectors within it such as solutions and services around SMAC, IS outsourcing, IT consulting, software testing.
• Engineering and R&D within which the fastest growing sectors are – telecom & semiconductors.