Hyderabad, March 24: The National Association of Software and Services Companies (Nasscom) has requested the government for relief to small and medium IT units under the proposed direct tax code (DTC) to offset the impact of the termination of the STPI (Software Technology Park of India) scheme.

Nasscom president Som Mittal said a memorandum had been submitted to the government seeking fresh incentives based on the location, innovation or employee potential of the small and medium enterprises (SMEs) in tier 2 and tier 3 cities.

“With the end of the STPI benefit from March, we expect the government to offer tax exemptions to support SMEs because they are the ones who are driving innovation in the industry. The interim offer of investment-based incentives is not very useful as the IT industry works on human capital and, hence, incentives should be focused on relief for human resources,’’ Mittal said.

He said the country faced a negative trade balance, which could be improved by infotech. “India needs to focus on IT exports to offset trade balance and technology offers high value-added exports.’’

The $76-billion IT/BPO industry was disappointed over the government’s reluctance to continue the STPI scheme. Besides, the Centre has brought SEZs under minimum alternative tax (MAT) in the budget, which will hit IT units.

Nasscom expects the industry to grow 16-18 per cent in 2011-12 and offer up to 2.4 lakh jobs. An average salary hike of 10-12 per cent across the board is also likely in this year.