ITsAP proposes allocation of Government projects to SMBs to Honorable Chief Minister

Hyderabad June 26, 2010: ITsAP – A delegation of ITsAP- The IT and ITES Industry Association of AP – [Formerly HYSEA], headed by Mr. L Suresh, President, ITsAP met Honorable Chief Minister of Andhra Pradesh, Dr K Rosaiah, bringing to his notice certain key issues that need to be addressed immediately to leverage the potential for growth of IT & ITES sectors and take Andhra Pradesh to the next level.

Online PR News – 27-June-2010 – – Mr. L Suresh was accompanied by Mr. JA Chowdary (Past President, ITsAP), Mr. V Rajanna (Vice President, ITsAP), Mr. Bipin Chandra (Secretary, ITsAP) and Brig. Hari Kumar (Executive Director, ITsAP). Also present at the meeting were the Minister of IT Mr. K Venkat Reddy and Mrs. Ratnaprabha, Principal Secretary – Information Technology in the Chief Minister’s chamber.

The key issues that were brought to the notice of Honorable Chief Minister were:

• 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 that 10% of government business should be awarded to SMBs. This will attract companies from other states to come and set-up operations in AP. Mrs. Ratnaprabha, Principal Secretary – Information Technology indicated that she received a similar note from Government of India and she promised to identify mechanisms on how this can be implemented.

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

• Because the tax benefits under the STPI scheme are ending in March 2011, there will be no level playing field between SMBs and large companies as large companies can move into SEZs while SMBs cannot due to the high rentals in SEZs. ITsAP requested GoAP to build a facility in SEZs that can be earmarked for SMBs at subsidized rentals. ITsAP also requested Honorable CM to send a recommendation for favorable extension of STPI scheme beyond March 2011. Honorable CM promised to send a note immediately and also discuss this issue during PM’s visit to AP in July. Pending creating new facilities for SMBs in existing SEZs, government has agreed to provide space at subsidized rentals in existing SEZs.

• 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 the Industry needs 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 coming up with aggressive preferential policies for Tier II cities. Honorable 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 “Honorary Chief Minister 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.

About Information Technology & Services Industry Association of AP – ITsAP (Formerly HYSEA)
ITsAP is a registered apex body with more than 300 members representing software industry in AP under the Andhra Pradesh Societies Registration Act. ITsAP aims to place Andhra Pradesh as the leading intellectual capital of the world, by nurturing entrepreneurship, research and innovation, to achieve global excellence in IT products and services. ITsAP also works for the growth of IT industry via participations in overseas and domestic promotional drives and close liaison with visiting delegations overseas. ITsAP can be reached at

For further media queries, please contact Perfect Relations:
Vishal @ 9701834446, Ritika @ 9963370101

visit our website