Minister opposes licences for IT-enabled services

By Sandeep Dikshit

NEW DELHI, JUNE 28. The Union Minister for Information Technology, Mr. Pramod Mahajan, has thrown a spanner into the Government's plan to finalise the Convergence Bill at the earliest. His Ministry has strongly opposed the move to include value-added services (also known as IT-enabled services) in the proposed common licence for communication services.

IT-enabled services like call centers, medical transcription, online education and web content development are forecast to grow at a scorching pace in India. The Government has also acknowledged its potential by identifying it as a ``key opportunity area''. A majority in the Group on Telecom and IT (GoT-IT), which is vetting the Convergence Bill, favours inclusion of IT-enabled services in the common licence for all communication services including cellular, basic telephony, radio paging.

But Mr. Mahajan does not want IT-enabled services to be included. His Ministry reasons that the penetration of ICE (information, communication & entertainment) in India is low. Subjecting value- added services to any form of licensing will not only affect promotion and penetration of ICE but also adversely impact employment, business opportunities and investment in the country.

Another reason cited by the Ministry of Information Technology (MIT) is that many investors would offer such services from infrastructure set up outside the country. This will make the task of monitoring companies who have the infrastructure in the country extremely disputatious.

Mr. Mahajan's reasoning should be music to the ears of companies planning to take up common licences. In case the proposal is accepted, these companies will be exempt from paying licence fees on the income earned from value-added services. This segment has already become a major revenue earner. Companies offering IT- enabled services have reported a 70 per cent increase, from a modest Rs. 2,400 crores in 1999-2000 to Rs. 4,100 crores next year. The IT industry association Nasscom says IT-enabled services will earn companies Rs. 81,000 crores and provide 11 lakh jobs by the year 2008.

Nasscom indirectly supports Mr. Mahajan's plea for excluding IT- enabled services from licencing. While calling for numerous policy incentives from the Government, Nasscom has predicted that this segment will be a major foreign exchange earner for innovative entrepreneurs and therefore should not be subject to controls. Mr. Mahajan's argument is also on the same lines. ``Licensing of value-added services shall only stifle growth and innovation among Indian people and entrepreneurs,'' observes his Ministry in a representation to GoT-IT.

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