Indian IT sector, which is under pressure due to rupee appreciation and slowdown in the US economy, is expecting a fresh lease of life from the Budget in the form of extension of Software Technology Park of India (STPI) scheme.

IT majors like Infosys, Satyam and BPO firm Cognizant as well as Nasscom has mooted for extension of the STPI scheme, which is a 100 per cent export oriented scheme, for undertaking software development for export.

“The IT industry is expecting the Government to implement the recommendations of the Kelkar Committee in linking the phase out of the tax holiday with the signing of the totalisation agreement with the US, “ Infosys Technologies CEO and Managing Director Kris Gopalakrishnan said.

“A clear statement regarding the continuation of the benefits given to the IT industry beyond 2009 as well as a clear directive regarding the recognition of IT companies under the SEZ policy are also welcome,” he added.

Satyam Computer Services Chairman B Ramalinga Raju said, “All we need is a better appreciation of the potential by the government. However, it appears that a view comes to have prevailed among the policy makers that the IT and BPO industry has arrived and is quite self-contained. However, the government has to join hands with the industry, like it has done when the industry was nascent.

“Much of the lost revenue for the government will be offset by direct and indirect taxes arising out of enhanced employment. The more difficult problem to solve will be standing up to the China challenge and the containment of the dramatic fall of the dollar,” he Raju said.

“The extension of the tax holiday under the STPI scheme, which expires on March 31, 2009, can prove to be a big shot in the arm for the industry,” Cognizant Vice-Chairman Lakshmi Narayanan said.

Nasscom had also in its  memorandum said that the smaller companies are finding it difficult to rent SEZ space as enough capacity is not always available.