IT Taskforce

VI. OTHER BANKING ISSUES

55. Working Capital:

(i) From an amount of Rs.750 crores of working capital for the IT Products industry during 1998-99, the amount will be increased to Rs. 2000 crores by the year 2000-2001. A system will be put in place which would enable adequate increase in working capital provided by the banks.

(ii) IT products and related IT Services industry will be treated as a Priority Sector by banks for the next five years. This would help to meet the requirements of IT Products and related service exports, and also the IT industry and applications within the country. Major banks will be advised to create specialised IT financing cells in important branches, where IT units are sufficiently large in number. Performance in this dimension will be monitored by the Ministry of Finance.

56. Venture Capital

(i) The banks will be allowed to invest in the form of equity in dedicated venture capital funds meant for IT industry.

(ii) Banks like ICICI and TDICICI will set up joint ventures with Indian or foreign companies for setting up at least two different venture capital dedicated funds of a corpus of not less than Rs.100 crores each to cater to the credit need of the Hardware industry.

(iii) Venture capitalists will be allowed to set off losses in one invested company and profit in another invested company during the block years for the purpose of income tax.

(iv) All IT products and related services will be considered eligible for exemption under section 10(23)F of the Act for venture capital investment.

The term "Computer Software" shall be replaced by "IT Products including IT Software and IT Services" in the explanation of the term 'Venture Capital Undertaking' appearing below Section 10(23F).

v) The NSE threshold will be reduced to Rs. 1 crore level for the IT industry.

vi) Other recommendations given in Annexure-V will be maximally accommodated.

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