New Delhi: Founder and chief mentor of India’s second largest information technology (IT) firm Infosys Technologies Ltd, N.R. Narayana Murthy, has won the Most Admired Indian award from the All-India Management Association (AIMA).
Simpler tax norms: Chief mentor of Infosys, N.R. Narayana Murthy. Harikrishna Katragadda / Mint
In an interview, he said the IT industry, which makes thousands of crores of rupees in profits, does not require tax exemptions extending over decades. But he favours a simplified tax regime. He also said the appreciation of the rupee against the dollar, which hurts the margins of export firms, has to be accepted “as part of our life”.
He spoke about his association with microfinance in India, and the prospects of the multinational consumer goods maker Unilever Plc, of which he was until recently a board member. Edited excerpts:
This is the first AIMA Most Admired Indian award. What’s your initial reaction to this?
I am very grateful to AIMA for this recognition, kindness and generosity on their part. I will continue to work hard and hopefully smart to deserve their trust and their confidence in me.
The rupee has appreciated back to the $45 level. How much does this worry the IT industry?
If you look at all our neighbouring nations—Thailand, Singapore or even other nations such as (the) UK, France, euro, pound-sterling, Brazilian currency, Argentinian peso, all of them have appreciated considerably against (the) dollar. So we will have to accept these things as part of our life and move ahead. I don’t think it should matter too much.
Another concern for the industry is the approaching end of tax benefits.
My personal view is that all tax exemptions must be removed. We must have a very simplified tax regime. If we are in exports, it is not because of tax concessions, but because there is a market out there which values our competencies and our talent. However, if you want to encourage small companies, maybe you can say up to Rs20 crore, Rs30 crore or Rs40 crore of profits you would give (as) tax exemption, or for a certain number of initial years, like three-four years.
Asking for tax exemption for tens of years in my opinion is not the smartest thing. When we criticize subsidy to farmers, to poor people and NREGA (Mahatma Gandhi National Rural Employment Guarantee Act) schemes, what is the justification in rich industrialists making thousands of crores of profits asking for continuing their tax exemptions. Frankly, I find it is somewhat vulgar.
Your venture capital fund Catamaran has recently invested Rs28 crore in Vikram Akula’s SKS Microfinance, which is now going in for an initial public offering. Can you tell us more about that?
I cannot because they have filed their red herring (prospectus). I am a great admirer of Muhammad Yunus (Bangladeshi pioneer of the concept of microfinance). We both serve on the board of UN Foundation. I have known him for quite a few years. I have had a lot of discussion with him on the role that microfinance can play in a country like India. Microfinance is an important instrument in bringing the alleviation of poverty in the country. So we are very happy with our investment.
You have recently resigned from the Unilever board, which has been facing a tough time in India. How would you assess its performance?
I didn’t stand for re-election to the Unilever board after three years. I didn’t resign. On the issue of Unilever, I have no doubt at all that Unilever will continue to do well. It is an extraordinary company and has (a) great leadership team. It is one multinational that has identified itself with India.
It is a company which has leaders who are very much part of the discussions on what we in India can do to become a better place. In that sense I do think that Unilever has a great future. There will always be short-term ups and downs. However, I don’t think that will at all affect Unilever in any significant way. I am hopeful, confident and very positive about the future of Unilever.