Digital Signatures: Ink For e-Initiatives

by Hanil Manghani    Nov 06, 2006

Initiatives like compulsory e-filing for exporters and the more recent amendment making it mandatory for companies to e-file tax returns could be harbingers of opportunity for the nascent and erstwhile modest-sized digital signature market.

Besides benefiting the government bodies and the tax paying companies, the MCA’s (Ministry of Company Affairs) e-initiative has the sector excited. “The market potential is enormous. There are around 7.5 lac registered companies across all the ROCs - even if we assume 20% of these are defunct we are talking of a market potential of around 5 lacs certifications,” informs S R. Kannan, head - security services, Sify.

Though currently a handful of Certifying Authorities (CAs) like Safescrypt, TCS, (n)Code (a division of GNFC), MTNL, Sify and IDRBT issue digital certificates, the market if wide open to fresh entrants.

Kannan informs that the digital signature space has witnessed 50 to 100% growth, attracting tens of crores in business in the last two quarters alone. Realizing the sizable opportunity at hand, the vendor is ramping up channel/ support partners across the country. In addition to that, Sify is also tying up with CA/ CS firms to represent it in addition to road shows and forums.

Other upcoming initiatives will also serve to stimulate the industry. “The next major wave could involve making e-filing compulsory for IT returns for individuals and Service Tax returns for high service tax payers. Another big opportunity is the e-governance initiative being executed by state governments and PSUs across the country - things like e-procurement initiatives are part of this initiative and are expected to throw up good opportunities for Digi-Cert vendors like us,” informs Kannan.

Benefits will spill over to allied service providers and vendors too. “Three types of service providers are likely to benefit from this initiative. The functional - the CA bodies, the technology driven - technology facilitators for the CAs, and the techno-functional - which offer end-to-end services, from compiling to filing,” says Prasad Rajappan, founder of Cnergies, and end to end techno-functional outfit.

Channel partners and system integrators too stand to gain, as do companies like SAP and Oracle who offer solutions pertinent to e-governance.

Other such initiatives include DGFT’s e-com application, custom’s and excise department’s ‘icegate’ initiative and e-biz project of NISG. Many state governments are pursuing e-procurement. Andhra is way ahead, Gujarat is doing substantial work, MP and Karnataka are just unveiling major projects in this area, as have Chhatisgarh and Rajasthan. Many public sector units like northern railways (others have just joined), IFFCO, NFL, GNFC, GACL, ONGC, GAIL, BPCL are also doing e-procurement, informs J S. Kochar, Chief Executive, (n)Code Solutions, div. of GNFC Ltd.

The long overdue initiative offers several benefits for both the tax department and organizations filing their returns. Besides eliminating personal interface, introducing transparency and anytime/ anywhere convenience in the procedure, e-filing will help implement and increase compliance, reduce cash transaction entries and monitor tax evasions. It will also cut down substantially on time, paper, manpower and space requirements involved in paper filing.

The project however has not been without problems that are mainly teething and XML related. It is being speculated that the process of e-filing taxes is still not as seamless as it ought to be.