Thiruvananthapuram, Jan 4 (IANS): Kerala IT honchos Saturday asked Prime Minister Manmohan Singh to revive the Software Technology Parks of India (STPI) scheme in tier 2 and tier 3 cities.

The STPI was set up in 1992 and all IT companies that were set up under it were given income- tax benefits.

The scheme ended in 2011 and many IT companies from the state have been requesting that it be extended.

Representatives of the Group of Technology Companies (GTech), the industry body of software companies in the state, met the prime minister here and conveyed their demand.

The prime minister assured the GTech representatives that he would seriously examine the issue. He said that diversification of the IT industry to tier 2 and tier 3 cities of India is crucial for inclusive growth.

Chief Minister Oommen Chandy was also present at the discussion.

"Ninety percent of the IT exports from India emanate from units in the seven tier-1 cities of Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata. The 50-plus tier-2 and tier-3 cities of India account for less than 10 percent of the IT output of India," said GTech chairman V.K Mathews.

"There are tens of thousands of small IT companies based out of the tier-2 and tier-3 cities of India. Kerala itself has over 400 such companies. Since the next phase of growth of the IT industry in India, which is IP based and nonlinear, can be fuelled by units in these smaller cities, policy support has to be extended to such units," he said.

"Since the size of the IT industry in tier-2 and tier-3 cities is minimal, the actual tax loss to the government by giving this tax relief will be minimal. This will be a pathbreaking policy initiative by the Government of India," added Mathews.