The Hindu Business Line : IT solution vendors get dressed for VAT regime

THE proposed value-added tax (VAT) regime is expected to throw open business opportunities for IT solution vendors especially in the areas of supply chain management (SCM) and enterprise resource planning (ERP).

The IT solution vendors have geared up over the last few months, in terms of developing the add-on modules to their existing solutions and also introducing new solutions, to meet the new opportunities that are expected to unfold over the next few months.

"With VAT set to become a reality, there will be significant impact on the way business is being done in the country as companies have to adjust to the new taxation structure and accordingly would be re-evaluating their entire supply chain networks," said Mr Ravi Kathuria, General Manager, Enterprise Solutions, Baan InfoSystems Ltd.

"While our ERP solution is already VAT compatible, we see a strong business opportunity in the SCM space," Mr Kathuria said.

Baan has introduced a new SCM solution called Supply Chain Designer and Co-ordinator in a bid to capitalise on the demand and is planning to tie-up with implementation partners such as IBM and Accenture to market its solutions in India.

While the vendors were unable to quantify the business opportunity that is expected to open up with the VAT regime coming into effect, a cross section of the industry with whom Business Line spoke seem to be bullish on the prospects. This stems from the fact that VAT will not have uniform standard throughout the country, which will mean that companies may have to pay more tax in distribution and supply of goods and services from one corner to another across the country.

Companies, especially in the FMCG, pharmaceutical, retail and petroleum goods sector, in a bid to save money going into the tax net are expected to invest significantly in reorganising their supply chain networks across the country, said Mr Mukesh Arora, head of SCM solutions at KLG Systel. "This throws opens a lot of opportunity for us," he said.

ERP major SAP has come out with an add-on solution incorporating VAT features to support its existing customer base of 350-odd companies. SAP has set up a separate VAT cell consisting of consultants and developers from SAP Labs India, to help its customers for a smooth transition to the new system, said Mr Nagaraj Bhargava, National manager, marketing and alliances, SAP India. "We are providing the add-on solution free of cost to our clients," Mr Bhargava said adding that the company has conducted several workshops jointly with its integration partners on educating the clientele.

Mr Hari Padmanabhan, President, Enterprise Solutions, ICICI Infotech, said the company has come out with a plug-on solution with a SCM component that would go along with its ERP solution.

ICICI Infotech expects the sales of its plug-on solution to pick up, he said.

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