As Finance Minister Nirmala Sitharaman gears up to present Budget 2025 on February 1, the Indian IT industry has voiced its expectations for policy measures such as Special Economic Zones (SEZs) to sustain the country’s global leadership.
Industry leaders are calling for an extension of SEZ tax holidays and the reinstatement of key export incentives, such as the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Interest Equalisation Scheme (IES), which expired on December 31.
The RoDTEP scheme was introduced in 2021 to promote exports by refunding taxes and duties to exporters. The scheme replaced the Merchandise Exports from India Scheme (MEIS) to make incentives compliant with World Trade Organisation norms. The IES is a scheme that provides interest subvention to exporters for pre- and post-shipment rupee export credit
“These measures collectively will support the growth and global competitiveness of India's IT and tech/AI (artificial intelligence) industries,” said Raja Lahiri, Partner, Technology, Grant Thornton Bharat, told Moneycontrol.
He added the need to broaden the eligible purposes for the re-investment reserve under Section 10AA, allowing companies to reinvest income tax benefits from the years 11th through 15th of SEZ operations.
Expanding SEZ benefits to emerging technologies like AI, robotics, and machine learning, while aligning SEZ policies with global standards, would help foster innovation and long-term growth, he noted.
ER&D Players Plea
Mid-tier information technology player L&T Technology Services believes SEZ benefits will play an important role in bolstering India's position as an ER&D hub. The Vadodara-headquartered firm’s Chief Executive Officer Amit Chadha advocated for policies linked to the National Green Hydrogen Mission to further drive growth, innovation, and sustainability.
“At LTTS, we would like to concur with the view that as the government keeps encouraging innovation and building a strong human capital base and works towards creating India as an ER&D hub there would be more complex opportunities opening up for the economy. The introduction of SEZ benefits with respect to the tech industry will further improve India’s position and enhance its technology exports,” Chadha told Moneycontrol.
Experts say export incentives and skill development programs are key to solidifying the country’s position as a premier destination for engineering and R&D (ER&D) services.
Another mid-tier IT firm Happiest Minds Technologies says there’s a need to enhance ease of doing business through grants and incentives. “Investments in digital infrastructure such as broadband and smart cities will open new opportunities for tech companies, while sustainability-focused policies can support environmental goals,” the Bengaluru-based company’s Executive Vice Chairman Joseph Anantharaju told Moneycontrol.
Many IT companies provide services in the digital infrastructure space.
With the AI transformation, it is anticipated that over 27 lakh new tech jobs will be generated by 2028.
Echoing similar views, Joseph Sudheer Thumma, Global CEO & MD of Magellanic Cloud, urged the government to prioritise investments in digital infrastructure and skill development to unlock the IT sector's full potential in the global economy.
LLMs & Indic Languages
Additionally, some IT firms also believe that India needs to invest in making AI work in Indic languages and considerations in the budget for companies innovating in this space will make a big difference.
“With AI's rise, there is an increasing need for GPUs (Graphic Processing Unit), and energy consumption is expected to soar, making it crucial for organisations and the government to collaborate on extending sustainability goals. Policymakers must invest in helping businesses scale AI adoption effectively,” ManageEngine’s President Rajesh Ganesan said.
Many say Budget 2025 is a crucial opportunity to bolster India’s AI innovation and governance. Beyond strategic partnerships and investments in workforce skilling and acquiring infrastructure, enhancing support for Indic LLMs and localised innovation is key.
“Incentivising indigenous chip design and manufacturing to strengthen our AI sovereignty and build resilience to global supply chain disruptions in the medium term is also an important prerogative,” said Hari Balaji, Technology Consulting Partner, EY India.
The industry is optimistic that the upcoming budget will address these demands, ensuring India's tech sector remains globally competitive and well-positioned for emerging opportunities.
Also, read: Budget 2025: Real-money gaming firms seek redressal of tax issues, rationalisation of policies
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