Report of the Sub-Group of the Inter

Transcription

Report of the Sub-Group of the Inter-Ministerial Standing Committee
Report of the Sub-Group of the
Inter-Ministerial Standing
Committee
Revision of the
Software Technology Park (STP) &
Electronic Hardware Technology Park
(EHTP) Schemes
April 2013
Inter-Ministerial Standing Committee, Government of India, New Delhi
Revision of the STP & EHTP Schemes
1
Preface
The Government of India had announced a policy on software development and exports way back in
December 1986. Subsequent to the announcement of this policy, Department of Commerce and Industry
and Department of Electronics and Information Technology (DeitY) notified the Electronic Hardware
Technology Park (EHTP) and the Software Technology Park (STP) scheme in 1992 and 1994 respectively.
Both these schemes were notified as 100% EOU schemes under the then Exim policy of the Ministry of
Commerce and Industry. Over the years, these two schemes have been strongly instrumental in developing
India as an IT superpower and the exports from the units established under these schemes have touched
Rs. 2.25 lakh Crores.
The two schemes are administered by the Inter Ministerial Starring Committee (IMSC) under the
chairmanship of Secretary, DeitY. Apropos to the new policies on information technology, telecom and
electronics, the IMSC in its meeting held on 5th July 2012 resolved that the STP/EHTP schemes need to be
revamped in order to give a push to the IT/ITES and ESDM sectors so that the objectives of the national
policies can be achieved.
Accordingly, the IMSC constituted a Sub-Group to review the two schemes and suggest changes that are
required to revamp the same. The members of the Sub-Group:
•
Dr. Omkar Rai, Director General, Software Technology Parks of India;
•
Shri Manoj K. Arora, Additional Director General, DGEP, Department of Revenue;
•
Dr. L.B. Singhal. Additional Director General, DGFT, Department of Commerce and Industry.
The Sub-Group held extensive discussions with the officers of STPI as well as with representatives of the
IT industry. In view of the aspirations of the industry as well as the critical contribution of this sector in
socio-economic development of India, it was decided to think in an out-of- the-box manner in order to
suggest the contours of policy intervention required for this sector. Based on the discussions and extremely
useful inputs provided by the industry, the Sub-Group has made a number of suggestions for revamping
the STP/EHTP schemes.
The Sub-Group received highly valuable support from the sub committee of officers of STPI constituted
by DG, STPI to whom its gratitude is due. The Sub-Group also expresses its gratefulness to the support
given by the officers of Department of Electronics and Information Technology, DGFT and Department
of Revenue. Finally a special mention needs to be made for the encouragement and guidance given by
Secretary, Department of Electronics and Information Technology which enabled the Sub-Group to think
out-of-the-box and put this report together.
(Manoj K. Arora)
ADG, DGEP
2
(Dr. Omkar Rai)
DG, STPI
(Dr. L.B.Singhal)
ADG, DGFT
C o n te n t s
Executive Summary
.............................................................................................. A-C
Introduction
.............................................................................................. 01
Constitution of the Sub-Group of IMSC
.............................................................................................. 05
National Perspective of the IT/ITES and ESDM Industry
.............................................................................................. 09
Global Perspective of the IT/ITES and ESDM Sector
..............................................................................................19
Role of the STP/EHTP Schemes in Development
of
the IT/ITES and ESDM Sector in India
..............................................................................................25
Stakeholder Perspective on the STP/EHTP Schemes
..............................................................................................33
Recommendations
..............................................................................................41
Appendices
..............................................................................................59
3
Acronyms
i4
ASCM
Agreement on Subsidies and Countervailing Measures
BPM
Business Process Management
CBDT
Central Board of Direct Taxes
CBEC
Central Board of Excise and Customs
CST
Central Sales Tax
DeitY
Department of Electronics and Information Technology
DG, STPI
Director General, Software Technology Parks of India
DGEP
Directorate General of Export Promotion
DGFT
Directorate General of Foreign Trade
DOR
Department of Revenue (of Ministry of Finance)
DR
Disaster Recovery
DTA
Domestic Tariff Area
DTC
Direct Tax Code
EEFC
Exchange Earners’ Foreign Currency
EHTP
Electronic Hardware Technology Park
EOU
Export Oriented Unit
EPZ
Export Processing Zone
ESDM
Electronics Systems Design and Manufacturing
FDI
Foreign Direct Investment
FEMA
Foreign Exchange Management Act
FI
Financial Institution
FOB
Free on Board
FT (D&R) Act
Foreign Trade (Development & Regulation) Act
FTP
Foreign Trade Policy
GDP
Gross Domestic Product
HBoP
Hand Book of Procedures
HRD
Human Resource Development
ICT
Information and Communications Technology
ICTE
Information and Communications Technology and Electronics
IMSC
Inter-Ministerial Standing Committee
ISP
Infrastructure Service Provider
IT
Information Technology
ITA
Information Technology Agreement
ITES
Information Technology Enabled Services
KPM
Knowledge Process Management
KPO
Knowledge Process Outsourcing
LOI
Letter of Intent
LOP
Letter of Permission (Permit)
LUT
Legal Undertaking
MDA
Market Development Assistance
MSME
Micro, Small and Medium Enterprises
NFE
Net Foreign Exchange
NPE 2012
National Policy on Electronics 2012
NPIT 2012
National Policy on Information Technology 2012
NTP-2012
National Telecom Policy -2012
PBWH
Private Bonded Ware House
PCFC
Packing Credit in Foreign Currency
R&D
Research and Development
RBI
Reserve Bank of India
SEZ
Special Economic Zone
SME
Small and Medium Enterprises
STP
Software Technology Park
STPI
Software Technology Parks of India
TPO
Trade Promotion Organization
UPS
Uninterrupted Power Supply
VAT
Value Added Tax
WTO
World Trade Organization
5
ii
Executive Summary
1.Introduction
The initiation of economic reforms in India since the early 1990s and the adoption of fiscal measures
for IT (Information Technology) and ITES (IT Enabled Services) and Electronics Hardware units have
contributed to a flourishing IT/ITES and ESDM (Electrnics Systems Design and Manufacuring ) sector
in the country. Among the major schemes providing fiscal incentives announced by the Government
of India are the Software Technology Parks (STP) Scheme and the Electronic Hardware Technology
Parks (EHTP) Scheme. The operation of these schemes has been administered by the Inter Ministerial
Standing Committee (IMSC) through Software Technology Parks of India (STPI) under the Department
of Electronics and Information Technology (DeitY), Ministry of Communications and Information
Technology, Government of India
During the Inter-Ministerial Standing Committee (IMSC) meeting, it was decided to form a Sub-Group
of the IMSC, which was mandated with the task of suggesting suitable steps to review STP and EHTP
schemes and suggest appropriate measures so that STPI can play a pro-active role in order to promote
the growth of the IT/ITES and ESDM industry in India. This Report gives the recommendations of the
Sub-Group of the IMSC in connection with the areas under its mandate, especially for the revision of the
STP and EHTP schemes. These recommendations have been made on the basis of feedback received from
various stakeholders; discussions during the Open Houses conducted in this connection and an analysis
of the national and global perspective.
2.
As stated earlier, during the Inter-Ministerial Standing Committee (IMSC) meeting held on 5th July 2012,
a decision was taken to form a Sub-Group of the IMSC consisting of the following officials:
• Dr. Omkar Rai, Director General, Software Technology Parks of India;
• Shri Manoj K. Arora, Additional Director General, DGEP, Department of Revenue;
• Dr. L.B. Singhal. Additional Director General, DGFT, Department of Commerce and Industry.
The above Sub-Group was mandated with the task of suggesting suitable steps in the following areas:
(a) To reconsider the STP and EHTP schemes in the light of current situation and past experience and
suggest appropriate measures for improvement in the STP scheme so that STPI can play a pro-active
role.
(b) To promote the growth of IT/ITES industry in India.
(c) 1. To review the Custom Notification No:153/93, which provides duty free import of capital goods by
Infrastructure Service Providers (ISPs) for STP units, in order to make guidelines while exiting from
the scheme etc.
2. To prepare guidelines to streamline the procedure for extension/renewal of LOP of ISPs, extension
6
A
of Private Bonded Ware House (PBWH) License for ISPs and also plug the loopholes.
3.
This section gives the National perspective on IT/ITES and ESDM (Electronic System Design and
Manufacturing) industry in India briefly covers the following aspects:
• Historical perspective;
• Development of government policy for IT sector;
• Growth trends and geographical spread;
• Economic and social impact of the growth and development of IT sector;
• Why is this sector critical for India; and
• Brief notes on National IT Policy, National Telecom Policy etc.
Tables and graphs have been included, wherever appropriate. The above perspective gives the national
picture as a background for the revision of the STP and EHTP schemes.
4.
Since the STP and EHTP schemes exist to encourage Indian exports in the global markets, the following
points have been discussed in the above section:
• Recent development in global markets in terms of growth and expansion;
• Innovations in other countries vis-à-vis India; and
• SWOT analysis of IT industry in India with respect to its positioning in the world.
5.
Role of the STP/EHTP Schemes in Development of the IT/ITES and ESDM Sector in India
As its heading suggests, this section examines the role of the present STP and EHTP schemes in the
development of the IT/ITES and ESDM sector in India. The discussion includes a brief coverage of the
following areas:
• Basic details on the STP/EHTP schemes and their evolution;
• Contribution of the schemes in development of IT/ITES and ESDM sector in India (with requisite data,
graphs, tables etc.); and
• Role, responsibilities, functioning and contribution of STPI.
The above coverage furnishes the background information needed for assessing the working of the STP /
EHTP schemes in their present form.
6.
Stakeholder Perspective on the STP/EHTP Schemes
The above section covers the following points in connection with the process of obtaining the stakeholders
perspective on the STP / EHTP schemes:
vii
B
• Brief note on process of consultation and feedback;
• Strengths and weaknesses in the current schemes; and
• Why to we need afresh policy intervention
It may be noted that the collection of feedback from industry was done during October 2012 through
a Questionnaire, which allowed responses to be filed on-line. The analysis of such feedback was
subsequently carried out during November 2012. Appendix VI gives a summary of the Industry response
to the various queries. Based on the principal emergent issues, Open Houses were held in four cities of
the country in between November 2012 and January 2013. The outcomes of these Open Houses enabled
the Sub-Group to crystallize its recommendations. The proceedings of the Open Houses are given at
Appendix IV.
7.Recommendations
Based on the overwhelming response of the stakeholders as well as the deliberations of the internal
meetings of the Sub-Group members, it is felt that the software and electronic hardware exporting units
need handholding and incentivization so that their growth is not only stepped up but is also sustained
over a period of time. It is also felt that keeping in view the immense social and economic contribution
of this sector, the government needs to give a strong policy push in this direction.
The Sub-Group has made recommendations pertaining to its mandate. These recommendations are
primarily divided into the following six categories:
• Recommendations on Policy Measures;
• Recommendations on Promotional Measures;
• Recommendations on Handholding Measures;
• Recommendations regarding Direct Taxes;
• Recommendations regarding Indirect Taxes; and
• Recommendations regarding Infrastructure Service Provider.
It is expected that the above steps will give a push to the IT/ITES and ESDM sectors of our country, so
that the objectives of the national policies can be achieved.
It may be worth mentioning that during the Bengaluru session of Open House conducted by the IMSC
Sub-Group the industry representatives had raised the issue of lack of clarity regarding permission to
work from home. DG, STPI expressed that although the provision exists for STP units a clarification may
be issued and therefore requested Additional DGFT who was present in the open house to clarify the
matter in the Foreign Trade Policy. Although the Sub-Group has made relevant recommendation in this
document, the facility of work from home has now been clearly extended to STP/EHTP/EOU/BTP by DGFT
by way of Public Notice No. 5 (RE-2013)2009-2014 dated 18th April 2013 (Annexure-VIII).
viii
C
Introduction
ix
x
Introduction
Introduction
The initiation of economic reforms in India since the early 1990s and the adoption of fiscal measures for
promotion of export of software, services and electronics hardware industry have contributed to a flourishing IT/
ITES and ESDM (Electrnics Systems Design and Manufacuring ) sector in the country. Among the major schemes
providing fiscal incentives announced by the Government of India are the Software Technology Parks (STP)
Scheme and the Electronic Hardware Technology Parks (EHTP) Scheme. The operation of these schemes has
been administered by the Inter Ministerial Standing Committee (IMSC) through Software Technology Parks of
India under the Department of Electronics and Information Technology (DeitY), Ministry of Communications
and Information Technology, Government of India. The STP Scheme took off as an export oriented scheme for
the development and export of computer software, which included the export of professional services. The EHTP
Scheme was notified in order to build a strong electronics and hardware industry in the country.
Following the path of India, many developing nations have recently emerged as software services exporters.
These countries have low costs and offer incentives to their emerging IT/ITES and ESDM units. At the same time
under global economic recession existing IT/ITES and ESDM units in the country has been facing cost pressures.
It is imperative for the Indian IT/ITES and ESDM Industry to diversify into Tier II and Tier III cities, which have
lower cost structures and offer scope for growth.
The number of units registered under the STP Scheme reached 8,455 in 2008-09, and have declined since then.
The feedback received suggests that the decline in the number of STP units is due to the factor like the withdrawal
of income tax benefits under Section 10A / 10B from 31st March 2011, which has hit 80-90% of the IT/ITES and
ESDM exporters; economic woes of key markets (North America, U.K. and Europe) that account for more than
85% of Indian IT/ITES and ESDM exports; growing competition from other nations, which provide significant tax
concessions and offer extremely attractive fiscal incentives; and the inability of medium and small players to
avail the benefits under the SEZ Scheme.
During the Inter-Ministerial Standing Committee (IMSC) meeting held on 5th July 2012, it was decided to form
a Sub-Group of the IMSC consisting of the following officials: Director General of Software Technology Parks of
India; Additional Director General of Export Promotion; and Additional Director General of Foreign Trade. The
above Sub-Group of the IMSC was mandated with the task of to suggesting suitable steps to reconsider the STP
and EHTP schemes and suggest appropriate measures so that STPI can play a pro-active role in order to promote
the growth of the STP and EHTP units in India.
This report gives the recommendations of the Sub-Group of the IMSC in connection with the areas under its
mandate, especially for the revision of the STP and EHTP schemes. These recommendations have been made on
the basis of feedback received from various stakeholders; discussions during the Open Houses conducted in this
connection and an analysis of the national and global perspective.
1
2
Constitution
of the
Sub-Group of IMSC
3
4
2.1
Constitution of the Sub-Group & Its Members
During the Inter-Ministerial Standing Committee (IMSC) meeting held on 5th July 2012, it was decided
to form a Sub-Group of the IMSC consisting of the following officials:
1. Dr. Omkar Rai, Director General, Software Technology Parks of India;
2. Shri Manoj K. Arora, Additional Director General, DGEP, Department of Revenue;
3. Dr. L.B. Singhal. Additional Director General, DGFT, Department of Commerce and Industry.
2.2
Terms of Reference
The above Sub-Group of the IMSC was mandated with the task of to suggesting suitable steps in the
following areas:
suggest appropriate measures for improvement in the STP/EHTP schemes so that STPI can play a
pro-active role.
(b) To promote the growth of IT/ITES and ESDM industry in India.
the scheme etc.
2. To prepare guidelines to streamline the procedure for extension/renewal of LOP of ISPs,
extension of Private Bonded Ware House (PBWH) License for ISPs and also plug the
loopholes.
5
6
National Perspective
of the IT/ITES
and
ESDM Industry
7
8
3.1
Historical Perspective
The current position of the IT/ITES and ESD Mindustry in India is a result of the decades of sustained
efforts by its leadership and the government, aided by educational, social, cultural and historical factors.
The history behind this evolution includes the technical foundations laid in the pre-independence period,
the subsequent developments in the post-independence years (1947-1981), the loosening of controls in the
pre-liberalization period (1981-90) followed by the attainment of critical mass in the post-liberalization
period. The following briefly gives the growth of the IT industry in the country from 1996-97 to 2004-05;
i.e. during the period when the industry established itself as a global force.
Growth of IT Industry: 1996-97 to 2004-05
The following table gives the annual turnover of the Indian software industry in the years from 1996-97
to 2004-05. It shows the predominant export orientation of the above sector.
Table 3.1 – Turnover of the Indian Software Industry ($ in Billion)
Year
96-97
97-98
98-99
99-00
00-01
01-02
02-03
03-04
04-05
Exports
1.10
1.76
2.60
3.40
5.30
6.20
7.10
9.20
12.20
Domestic
0.76
1.18
1.41
1.90
2.50
2.50
2.80
3.60
4.30
Total
1.86
2.94
4.01
5.30
7.80
8.70
9.90
12.80
16.50
Source: ‘Indian Software Industry’, S Bhatnagar
Historical Perspective of the Indian Software Industry from 1996-97 to 2004-05
9
3.2
Development of Government Policy for the IT/ITES and ESDM Sector
In December 1986, the Government of India announced a Policy on Computer Software Export, Software
Development and Training (No. 17(38)/Comp/84 (Part) dated December 18, 1986). This paved the way
for acceleration of the ongoing activities in these sectors. Within a few years, major economic reforms
were initiated in India. Consequently, several measures were taken up for the liberalization of external
trade, elimination of duties on imports of information technology products, relaxation of controls on
both inward and outward investments and foreign exchange etc. These steps, along with the fiscal
measures taken up specifically for software and hardware industry, have contributed to a flourishing IT/
ITES and ESDM sector in the country. In 2011-12, the production of Software and Electronics in India
was estimated to be over Rs. 5.67 lakh Crore.
The major fiscal incentives provided by the Government of India have been available for the Export
Oriented Units (EOU), Software Technology Parks (STP), Electronic Hardware Technology Parks (EHTP)
and Special Economic Zones (SEZ). The operation of the STP and EHTP Schemes is being administered
by the Department of Electronics and Information Technology (DeitY), Government of India.
3.3
Growth Trends and Geographical Spread
Growth Trends: 2006-07 to 2011-12
The tables at the following page give the growth of software and electronics hardware production and
exports in the country in the recent years. The graphical representation of the same is given below.
Trends in Software and Electronics Production [From Table 3.2 at overleaf]
10
25,550
29,000
32,000
34,300
2008-09
2009-10
2010-11
2011-12 (*)
1,600
2,600
3,000
1,400
2007-08
2008-09
2009-10
2010-11
16,500
14,970
14,970
13,490
15,870
12,800
40,500
35,400
31,000
26,600
18,700
9,500
8,500
7,700
6,980
6,840
5,700
4,500
24,800
21,800
13,610
12,040
9,630
8,800
143,300
128,870
110,720
97,260
84,410
66,000
1,300
1,900
1,650
990
1,500
Computer
Hardware
14,800
7,800
12,280
625
650
Communications
& Broadcasting
Equipment
Break Up of Figures not Available
4,500
3,500
4,200
3,885
3,000
Industrial
Electronics
18,400
9,700
10,500
6,100
5,850
Electronics
Components
Exports in Financial Year (Rs. in Crore)
44,400
40,400
25,900
31,230
13,200
12,500
Sub Total
91,765
78,700
67,800
59,000
47,010
37,000
332,445
268,610
237,000
216,190
164,400
141,000
Computer
Software
332,445
268,610
237,000
216,190
164,400
141,000
Communications Strategic Electronics Sub Total Software Domestic
& Broadcasting Electronics Components
for Exports Software
Equipment
Table 3.3 –Software and Electronics Exports from India
18,700
17,000
15,160
12,740
11,910
10,400
Computer
Hardware
Production in Financial Year (Rs. in Crore)
Source: Annual Report, 2011-12 Department of Electronics & Information Technology [for both the above Tables]
(*) Estimated Figures
2011-12 (*)
1,500
2006-07
Consumer
Electronics
22,600
2007-08
Financial Year
20,000
Consumer Industrial
Electronics Electronics
2006-07
Financial Year
Table 3.2 – Software and Electronics Production in India
376,845
309,010
262,900
247,420
177,600
153,500
Total
567,510
476,180
415,520
372,450
295,820
244,000
Total
11
Trends in Software and Electronics Export [From Table 3.3 at previous page]
Geographical Spread
So far, the larger cities have played a major role in software exports / production from the country. In
fact, seven Tier I locations contribute to over 90% of the total revenues of the country. These include
Bangalore, Hyderabad, Chennai, Mumbai, Pune, Delhi-NCR Region and Kolkata. However with setting up
of STPI centres in Tier II and Tier III locations, export from such locations are picking up.
12
STPI CENTERS
53 Centers throughout
the country
Srinagar
Jammu
Shimla
Mohali
Dehradun
STPI-HQ
New Delhi
Noida
Lucknow
Kanpur
Patna
Gwalior
Jodhpur
Gangtok
Allahabad
Jaipur
Guwahati
Siliguri
Shillong
Imphal
Durgapur
Ranchi
Gandhinagar
Indore
Haldia
Kolkata
Kharagpur
Rourkela
Nagpur
Bhilai
Nasik
Aurangabad
Bhubaneswar
Behrampur
Navi Mumbai
Warangal
Pune
Vizag
Hyderabad
Kolhapur
Hubli
Vijayawada
Tirupati
Kakinada
Bangalore
Mangalore
Mysore
Manipal
Coimbatore
Trichy
Chennai
Pondicherry
MAP NOT TO SCALE
Madurai
Thiruvananthapuram
Tirunelveli
13
1.4
Economic and Social Impact of the IT/ITES and ESDM Sector
Economic Impact
The IT / ITES sector has become one of the key segments for the Indian economy because of its economic
impact in terms of output, employment and exports. The output and export dimensions of the sector have
been discussed in the previous sub-section. It may be noted that the sector now contributes to about 7.5%
of the GDP of India (2011-12). Exports contribute to over 78% of the total software revenues. In addition,
the sector has a multiplier effect on many sectors in the country. The following paragraphs give the
employment generated by the sector.
Direct Employment: The sector is responsible for creating significant employment opportunities in the
economy. Direct employment within the IT/ITES and ESDM sector is expected to grow by over 9% to reach
2.77 million, with over 230,000 jobs being added in 2011-12. IT services exports [including Engineering
Research and Design (ER&D) and software products] continue to be the largest employer within the
industry with nearly 47% share of total direct employment, BPO exports generate about 32% of the total
industry employment, and the remaining 22% is accounted for by the domestic IT-BPO sector.
Indirect Employment: The sector is responsible for enabling employment to an additional 8.9 million
people in various associated sectors – catering, security, transportation, housekeeping, etc. Many of the
persons thus employed belong to rural areas/ small towns of India.
Social Impact
The growth of the IT/ITES and ESDM sector in India has positively contributed to the social growth of the
country by encouraging the mobility of professionals from diverse communities, helping to encourage the
spread of technical education in many parts of the country, empowering women professionals, improving
employment prospects of educated youth and serving as a role model to the youth, who might have
become frustrated otherwise.
IT/ITES and ESDM units have contributed to the growth of several cities of the country. It capabilities
have helped the delivery of public services in sectors like health, education, literacy, water supply and
sanitation etc. The growth of the IT/ITES and ESDM units has boosted India’s image in the global arena.
Above all, it has served to help the inclusive socio-economic growth of the country.
1.5
Why is the IT/ITES and ESDM Sector is Critical for India
Information Technology sector has been one of the key drivers for faster and inclusive growth in the
Eleventh Five Year Plan period. It has contributed immensely to the development of Indian economy. India
has become a global power house in Information Technology sector. Over the years various initiatives
have been taken in the Information Technology sector to foster innovation, improve delivery of e-Services
to citizens and bring about profound change in the way business is conducted and the way Government
works. Information Technology has tremendous potential for the future of India. In view of the overall
priorities of the Government in the 12th Five Year Plan a focused and coordinated push of the IT sector
during 12th Plan period will help India achieve faster, sustainable and more inclusive growth.
The IT / ITES sector is critical for India not only because it has become one of the key segments for
the Indian economy but the sector has a multiplier effect on many sectors in the country. The sector
is responsible for creating significant employment opportunities in the economy. IT services exports
[including Engineering Research and Design (ER&D) and software products] continue to be the largest
employer within the industry The sector is responsible for enabling employment to an additional 8.9
million people in various associated sectors – catering, security, transportation, housekeeping, etc. Many
14
of the persons thus employed belong to rural areas/ small towns of India.
The growth of the IT/ITES and ESDM sector in India has positively contributed to the social growth of
the country, empowering women professionals, improving employment prospects of educated youth and
serving as a role model to the youth, who might have become frustrated otherwise. IT/ITES and ESDM
units have contributed to the growth of several cities of the country. Its capabilities have helped the
delivery of public services in sectors like health, education, literacy, water supply and sanitation etc. The
growth of the IT/ITES and ESDM units has boosted India’s image in the global arena. Above all, it has
served to help the inclusive socio-economic growth of the country.
1.6
Brief Notes on National Policy on Electronics, National Policy on Information Technology & National Telecom Policy
This sub-section briefly discusses the National Policy on Electronics 2012; the National Policy on
Information Technology 2012 and the National Telecom Policy 2012 as the STP and EHTP Schemes have
to be reviewed and consolidated as per the emerging policy environment of the country. The details of the
above policies are given at Appendix III.
National Policy on Electronics 2012
The National Policy on Electronics was approved on 25th October 2012. It provides a roadmap for the
development of this sector in the country. The Policy envisions creating a globally competitive Electronics
System Design and Manufacturing (ESDM) industry including nano-electronics to meet the country’s
needs and serve the international market. There is potential to develop the Electronic System and Design
and Manufacturing (ESDM) sector to meet the domestic demand and to export ESDM products from the
country. The National Policy on Electronics aims to address the issue with the explicit goal of transforming
India into a premier ESDM hub. National Policy on Information Technology 2012
The Cabinet approved the National Policy on Information Technology 2012 in September 2012. The Policy
aims to leverage Information & Communication Technology (ICT) to address the country’s economic and
developmental challenges. The policy is rooted in the conviction that ICT has the power to transform
the lives of people. The Policy focuses on application of technology-enabled approaches to overcome
developmental challenges in education, health, skill development, financial inclusion, employment
generation, governance etc., to greatly enhance efficiency across the board in the economy. The policy
seeks to achieve the twin goals of bringing the full power of ICT within the reach of the whole of India
and harnessing the capability and human resources of the whole of India to enable India to emerge as
the Global Hub and Destination for IT/ITES and ESDM Services by 2020.
National Telecom Policy 2012
The Union Cabinet approved the National Telecom Policy 2012 on 31st May 2012. The policy envisions
providing secure, reliable, affordable and high quality converged telecommunication services anytime,
anywhere for an accelerated inclusive socio-economic development. The main thrust of the Policy is on the
multiplier effect and transformational impact of such services on the overall economy. Telecommunication
has emerged as a key driver of economic and social development in an increasingly knowledge intensive
global scenario, in which India needs to play a leadership role. National Telecom Policy-2012 is designed
to ensure that India plays this role effectively and transforms the socio-economic scenario through
accelerated equitable and inclusive economic growth by laying special emphasis on providing affordable
and quality telecommunication services in rural and remote areas.
15
16
Global Perspective
of the IT/ITES
and
ESDM Sector
4.1
Recent Development in Global Markets in Terms of Growth and Expansion
IT/ITES and ESDM: Worldwide technology products and services related spend is estimated to reach $
1.6 trillion in 2010 with emerging verticals and emerging geographies, in addition to US, driving the
growth. IT services spend increased by 1.4% in 2010, within which IT outsourcing grew by 2.4 %. Within
IT outsourcing, global sourcing grew by 10.4% in 2010, validating the industry’s integral position in
service delivery chain.
Electronics: Worldwide, the electronics industry is one of the most flourishing and extremely diversified
sectors, growing at a rapid pace with the invention of innovative technologies and growing customer
inclination towards electronic goods and services. The industry has been experiencing phenomenal
and remarkable changes over the years, and is being distinguished with other industries by way of
technological developments. The key segments of the electronic industry are electronic components
industry, computer and office equipments, telecommunications, consumer electronics and industrial
electronics.
World electronics production is estimated to be $ 1.5 trillion in 2009 and world electronics exports are
estimated at US $ 1.3 trillion in 2009. Telecom and data processing equipments are the two largest
segments accounting for 25%, and 21%, respectively, of the total world electronics production in the
year 2009. Industrial and medical electronics accounted for 18% share, and audio-video equipments
accounted for 15% share in world production of electronics. Automotive (8%), aerospace & defence (7%),
and home appliances (6%) are other sub-sectors in electronics production. Until 2013, the total word
electronics production is expected to grow at a CAGR of 2.7%.
4.2
Innovations in Other Countries vis-à-vis India
Technological change and innovation, driven by research and development have been found to be the
most important sources of increased productivity, higher growth and better welfare. As a result, there is
a high correlation between those countries that have shown significant economic improvement in the
past and those countries that have made substantial investment in R&D. According to a 2011 global
R&D funding forecast, India’s investment in the crucial area of R&D is 0.9% of GDP (on purchasing power
parity (PPP)), which is quite low as compared to other countries. Table 4.1 at below may be seen. It may
also be noted that the IT/ITES and ESDM sector would account for a further small part of this investment,
and majority of this R&D funding comes out of public funded R&D projects.
It is believed that economic leadership in the 21st century will be achieved by nations who possess the
ability to convert internal or external scientific discoveries into commercial solutions in an economical
and efficient manner. Therefore, it is imperative for our country to enhance R&D capacities so as to move
higher up on the development ladder, develop and enhance indigenous technologies, and increase its
share in global innovations and their commercialisation. Furthermore, increased R&D capability and
capacity also plays a significant role in enhancing country’s security.
19
Table 4.1 – Global Domestic Expenditure on R&D
Rank
Country
Gross Domestic
Expenditure on R&D
(GERD) in $ Billions (PPP)
R&D as % of GDP
1
United States of America
405.3
2.7
2
China
153.7
1.4
3
Japan
144.1
3.3
4
Germany
69.5
2.3
5
South Korea
44.8
3.0
6
France
42.2
1.9
7
United Kingdom
38.4
1.7
8
India
36.1
0.9
9
Canada
24.3
1.8
10
Russia
23.1
1.0
Source: Global R&D Funding Forecast, Dec 2010 www.rdmag.com cited in the Report of the Working
Group on IT Sector, Twelfth Five Year Plan, Ministry of Communications & Information Technology,
Govt. of India
4.3
SWOT Analysis of the IT/ITES and ESDM Industry In India with Respect to its Positioning
in the World
The following gives a SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis of the IT/ITES
and ESDM industry of India with respect to its positioning in the global scenario.
STRENGTHS: The biggest strengths of the IT/ITES and ESDM industry include its cost advantage and
breadth of service offering. A study of global IT destinations by A T Kearney has found that India is
the most financially attractive country. The breadth of service offering includes virtually everything
including end to end solutions, high end services like IT consultancy and KPO. The demographic factors
are favourable since more than half of India’s population is less than 25 years old. Further, English
speaking IT/ITES and ESDM professionals are available and their numbers are growing at a good pace.
Another big strength is the quality and maturity of processes followed, since many players have quality
standards such as CMM to differentiate from other low cost advantage countries. The country has global
and proven 24x7 delivery capability with good internet backbone and telecommunications facilities being
available, which have enabled companies to develop 24x7 delivery capabilities from India itself.
WEAKNESSES: There is an excessive dependence on USA for revenues, at a time when US Companies
are cutting down their IT budgets. There is a disproportionate dependence upon the Banking, Financial
Services & Insurance (BFSI) sector for revenues. Banking sector is facing a crisis globally and is going to
spend less on IT. The industry also suffers from high rates of attrition. Although the present slowdown in
the global economy has lowered attrition rates, the industry still faces high attrition rates as compared to
other sectors. Above all, there is a decreasing competitive advantage as rising salary expenses and other
20
costs are taking away the cost advantage enjoyed by India.
OPPORTUNITIES: The major sources of opportunities include: (a) greater scope for product innovation,
(b) increased focus on high end work like consulting and KPO, (c) Domestic demand for IT services,
which are growing at 20 % per annum, and (d) greater scope to service domains other than BFSI such as
Transportation, Infrastructure, etc. In addition, the rapid changes in the global economic scenario are
throwing up opportunities that Indian companies are geared up to exploit on account of their inherent
strengths.
THREATS: The biggest threat is the present prolonged global economic slowdown, which may continue
for several years. This will lead to lower IT spending globally. The economic turmoil has led the Federal
Government in the USA (and several State Governments there) to adopt an anti-outsourcing posture.
The shrinking margin of IT/ITES and ESDM units due to rising wage inflation and other costs is another
threat. The rupee-dollar fluctuations affects revenues and hence margins – often in unpredictable ways.
There is an increased competition from foreign firms, apart from stronger competition from lower wage
countries like Philippines, China, Indonesia etc.
21
Role of the STP/EHTP
Schemes in Development
of the IT/ITES and
ESDM Sector in India
Role of the STP/EHTP Schemes in Development of the IT/
ITES and ESDM Sector in India During the Open Houses conducted by the Sub-Group, the industry had expressed its deep sense of
satisfaction for the efforts of STPI in extending the benefits of STP and EHTP schemes. This not only
speaks of good work of STPI, but also of the importance of the above schemes to the industry. Many STP
and EHTP units did not hesitate to say that their very inception and attainment of success have been
due to the above schemes. In short, the STP and EHTP Schemes had triggered the growth of IT and ITES
industry in the country.
5.1
Basic Details on the STP/EHTP Schemes and Their Evolution
STP Scheme
Following a resolution by the (then) Department of Information Technology in February 1993 (No.
17(38)/COMP/93-1.0 dated 22nd February, 1993), the Software Technology Park (STP) Scheme was
notified in March 1994 as a 100% Export Oriented Scheme under the EXIM policy by the Ministry of
Commerce and Industry [Notification No. 33/ (RE) 92-97 dated 22nd March 1994]. Presently the Scheme
is governed as per the provisions of the Foreign Trade Policy 2009-14 and it is being administered under
the aegis of the Department of Electronics & Information Technology, Ministry of Communications &
Information Technology, Government of India. A copy of the Notification of the STP scheme is available at
Appendix I.
The STP Scheme took off as an export oriented scheme for the development and export of computer
software, which included the export of professional services. It is a 100% export oriented scheme for
undertaking software export using data communication links or in the form of physical media including
export of professional services. The strength of the scheme is that it is a virtual scheme, which allows
software companies to set up operations in the most convenient and cheapest location and plan their
investment and growth solely driven by business needs. STP Scheme is a pan-India Scheme, supported
through STPI centres spread across India, with thousands of units being registered under the scheme.
The above scheme provides various benefits to the registered units like 100% foreign equity through the
automatic route; exemptions from customs duty for capital goods (with a few exceptions), exemptions
from service tax and excise duty; CST reimbursement, DTA entitlement, import of equipment and goods
(including second hand equipment) etc. However, the most important incentive available was 100 percent
exemption from Income Tax of export profits, which was extended till 31st March 2011.
EHTP Scheme
The EHTP Scheme was notified by the Department of Commerce and Industry, Government of India in
September 1992 (Notification No. 42(N-8) 92-97 dated 14th September 1992) in order to build a strong
electronics and hardware industry in the country with focus on enhancing its exports potential and
developing an efficient electronic component industry.
25
An Electronic Hardware Technology Park (EHTP) may be an individual unit by itself or a unit located in an
area designated as EHTP Complex. As in the case of STP Scheme, the EHTP Scheme is also administered
by the Ministry of Communications & Information Technology through STPI. An EHTP can also be set up
by the Central Government, State Government, public or private sector undertakings or any combination
of them. The entire production of an EHTP is to be exported to hard currency areas except sales in the
Domestic Tariff Areas, subject to limits set down. Appendix II gives a copy of the Notification of the EHTP
scheme.
5.2
Contribution of the Schemes in Development of the IT/ITES and ESDM Sector in India
STP Scheme
The STP Scheme has been extremely successful in fostering the growth of the software industry. The
exports made by STP Units have grown many-fold over the years. In fact, IT & ITES exports from such
units grew from Rs. 29,523 Crore in 2001-02 to Rs. 215,264 Crore in 2010-11 in the space of a decade.
The following table gives the year wise exports from STP units in the past decade.
Table 5.1 – Exports from STP Units (Rs. in Crore)
Year
01-02
02-03
03-04
04-05
Exports
29523
37176
51148 74019 100965 144214 180155 207358 205505 215264
Growth
(%)
---
25.92
37.58
44.72
05-06
36.40
06-07
42.84
07-08
24.92
08-09
15.10
09-10
-0.89
10-11
4.75
Source: Software Technology Parks of India
The above table is graphically represented as follows.
EHTP Scheme
The entire production of an EHTP is to be exported to hard currency areas except sales in the Domestic
Tariff Areas, subject to the limits set down. The exports from EHTP units have been significant, but less
26
compared to the same from STP units. The following table may be seen.
Table 5.2 – Exports from EHTP Units (Rs in Crore)
Year
01-02
02-03
03-04
04-05
05-06
06-07
07-08
08-09
09-10
10-11
Exports
1505
2206
2121
2174
2950
3446
4377
6208
7974
8113
Growth
(%)
---
46.58
-3.85
2.50
35.69
16.81
27.02
41.83
28.45
1.74
Source: Software Technology Parks of India
The following graph shows the growth of exports from EHTP Units.
5.3
Role, Responsibilities, Functioning and Contribution of STPI
Role & Responsibilities of STPI
Software Technology Parks of India (STPI) was established and registered as an Autonomous Society
under the Societies Registration Act 1860, under the Department on 5th June 1991 with an objective to
implement the STP / EHTP Scheme, set-up and manage infrastructure facilities and provide other services
like technology assessment and professional training.The objectives of the Software Technology Parks
of India are:
• To promote the development and export of software and software services including Information
Technology (IT) enabled Services and Bio-IT;
• To provide statutory and other promotional services to exporters by implementing the Software
Technology Parks (STP)/ Electronics and Hardware Technology Parks (EHTP) Schemes and other
such schemes;
• To provide data communication services including value added services to IT / IT enabled Services
(ITeS) related industries; and
• To promote micro, small and medium entrepreneurs by creating a conducive environment for
27
entrepreneurship in the field of IT/ITES and ESDM sectors.
Functions of STPI
Infrastructure & Support Services
STPI establishes and manages infrastructural resources such as communication facilities, core computers,
buildings and amenities etc. in the Software Technology Parks and provides various services (data link,
statutory services etc.) to users who undertake software development for export purposes. Similar services
are also extended to users who cater to the domestic market.
Promotional Activities
STPI promotes secondary and tertiary locations in the country by establishing STP facilities in such
places in order to extend the coverage of the STP / EHTP Scheme. STPI undertakes other promotional
activities such as technology assessments, market analysis, market segmentation etc. It works closely
with various State Governments and acts as an interface between Industries and the Government.
Training & Entrepreneurship Development
The activities of STPI in the above regard include the following:
(a) To organize advanced training in the field of software technology for skill development;
(b) To encourage entrepreneurship, by regularly organizing Entrepreneur Development Programs;
(c) To assist State Governments in formulating IT policies and liaison for promoting IT industries in the
respective states to achieve higher cumulative growth of exports from all parts of the country;
(d) To enhance quality and security standards in the IT industries; and
(e) To work jointly with venture capitalists for providing financial assistance to the IT industries.
STPI intends to create incubation with plug and play facilities with low operation cost in order to promote
small and medium entrepreneurs.
Contribution of STPI
Software Technology Park of India (STPI) had made a major contribution towards the country carving a
niche for itself in the global IT arena. When STPI was established in 1991, the sector’s export was a mere
Rs 50 Crore but it is now Rs 376 lakh Crore. After supporting development IT/ITES and ESDM industry
in major cities, STPI centres have been established in Tier II and Tier III locations. STPI centres paved for
establishment of IT parks as basic infrastructure for IT parks were made available by STPI centres.
State Governments pitched for STPI centres in order to begin an IT era in their states. Many of the
states have supported setting up of multiple STPI centres in their states. No of STPI centres have been
commensurate with the growth of IT/ITES and ESDM activities of a state. STPI is working closely with the
respective State Governments/local authorities for creation of more incubation space, equipped with stateof–the-art infrastructure facilities, for development of the software industry and increasing exports.
STPI has creates basic infrastructural support in the form of Business Incubators with state of art
facilities with Plug & Play facilities for start-up companies. These incubation services enable small and
medium enterprises to set up operations at minimal fixed costs with low start-up investment, thereby
encouraging entrepreneurship and creating jobs.
28
In view of the withdrawal of the tax benefits for STP units, STPI is working out a road map to facilitate
the IT sector in the changed scenario. Some of the salient steps in this direction are given below.
A non-profit linked incentive schemes for STP registered units is being formulated to ensure accelerated
growth of IT/ITES and ESDM exports and the dispersal of IT/ITES and ESDM industry to the Tier II and
Tier III cities across the country.
The present incubation programme of STPI would be further strengthened for innovation led Business
Incubation and entrepreneurial development for startup units. This programme would be designed to
provide venture, infrastructural and mentoring support to the entrepreneurs. In addition to the existing
infrastructure available at 52 STPI centres, STPI is in process of creating additional incubation space in
many locations. STPI would explore creating more and more incubation space in Tier II and Tier III cities
across the country.
STPI is working with DeitY for establishment of a National Productivity Network, which would create
capacity and necessary IT infrastructure across STPI centres to provide support primarily to SMEs across
the country. For this, the data centres at major STPI centres having excellent data communication and
cloud computing resources would be created.
MSMEs in India are facing unprecedented challenges necessitating the need for ICT adoption in their
business processes and integrating into globalized economic environment. With ICT tools, the MSME
sector can improve upon the way it is doing businesses currently and become more vigilant in the
finer details in its day-to-day operations thereby increasing its own competiveness. The ICT adoption in
manufacturing sector can change the way the organizations conduct their business which will enable
them to compete in the national and international markets. The major objective of ICT application is the
cost-effective and efficient improvement in business activities.
STPI would promote and assist the start-up companies in innovation/research & development. Further,
STPI would also create awareness & encourage the start-up companies to register the IPR of their
innovative products.
29
Stakeholder Perspective
on the STP/EHTP
Schemes
Stakeholder Perspective of the STP/EHTP Schemes
6.1
Brief Note on the Process of Consultation and Feedback
The Sub-Group of the Inter-Ministerial Standing Committee (IMSC) undertook a participatory process
to elicit responses from the stakeholders on various aspects of the STP and EHTP schemes. The above
process included conducting the following steps:
• Collection of Feedback from Industry through Questionnaire;
• Analysis of the Feedback; and
• Conduct of Open Houses to discuss the major issues
In the above connection, the Sub-Group had further constituted a Sub-Committee consisting of the
following members to assist it in gathering industry feedback, conducting Open Houses in selected cities
and drafting of the Report:
• Sri P.K.Das, Director, STPI Guwahati and Bhubaneswar - as Chairman;
• Smti. Vandana Srivastava, Additional Director, STPI Noida;
• Sri Sanjay Tyagi, Additional Director, STPI Bangalore; and
• Sri Manas Panda, Additional Director, STPI Bhubaneswar – all as members.
The collection of feedback from industry was done during October 2012 through a Questionnaire, which
allowed responses to be filed through the Internet. The analysis of the feedback was subsequently
carried out during November 2012. Appendix VI gives a summary of the Industry response to the various
queries.
Based on the principal emergent issues, Open Houses were held in four cities of the country in between
November 2012 and January 2013. The outcomes of these Open Houses enabled the Sub-Group to
crystallize its recommendations. The proceedings of the Open Houses are given at Appendix IV.
Table 6.1 – Open Houses to Discuss Revisions to STP & EHTP Schemes
Sl. Location
No.
Date of Open House
Remarks
1
Bengaluru
30th November 2012
Attended by over hundred senior level persons
from STP & EHTP units.
2
Jaipur
21st December 2012
The Open House at Jaipur was attended by the
representatives from 41 units.
3
Pune
15th January 2013
Representatives from 81 STPI / IT / ITES units
attended this Open House.
4
Bhubaneswar
24th January 2013
This Open House was attended by the
representatives from 66 STPI / IT / ITES units.
33
6.2
Strengths and Weaknesses in the Current Schemes
The stakeholders’ perspective on the strengths and weaknesses of the present STP / EHTP schemes
may be summarized as follows. Many of the issues have been dealt with under Sub-section 6.3, which
summarizes the stakeholders’ feedback.
Strengths
The STP Scheme has been responsible for the growth of IT / ITES exports from India. This is a strategic
policy initiative by Government of India, which allows software companies to set up operations in the
most convenient and cheapest locations and plan their investment and growth driven by business needs.
STPI has facilitated regional development by uniform dispersal of STP units across secondary cities and
thereby increasing employment opportunities in these areas. A majority of the STP units are Small and
Medium Enterprises (SMEs), which contribute about 15% in the total exports of IT-ITES sector from the
country.
The EHTP Scheme has assisted hardware exports, albeit on a lower scale. The above schemes have
several strengths as follows:
• STP / EHTP units can be set up anywhere in the country;
• 100% foreign equity is permitted under the above schemes;
• Export performance norms have been simplified;
• Sale in DTA is permitted on the payment of concessional duty;
The strength of the STP / EHTP Schemes lie in the fact that these are virtual schemes, which allow
companies to set up operations in the most convenient and cheapest locations and plan their investment
and growth solely driven by business needs. In addition, there are duty exemptions / reimbursements.
Besides, units are allowed to keep 100% of export earnings in EEFC account.
Weaknesses
The operation of the existing STP / EHTP Schemes has been handicapped by some weaknesses, which
can be remedied to boost exports from the country. These are summarized below.
• There is no focus in trade promotional under the STP/EHTP schemes. The SMEs/ MSMEs are not in
well equipped to build their image in foreign markets or promote their products through trade shows
in international destinations. Market development assistance is not available under the schemes.
• SMEs/ MSMEs need various infrastructural support as well as manpower development support which
are not clearly mandated in the schemes.
• The scheme does not have clear policy for venture incubation or angel investment.
• The single window clearance mechanism in STP/EHTP schemes has not been effective.
• Inter-Ministerial Standing Committee which is apex body for administering the STP/EHTP schemes
is not empowered to frame rules or relax them in the interest of growth of industry and export.
Moreover, there is no working group under the IMSC for speedy disposal of day to day issues.
34
• The provisions under STP/EHTP schemes are not sufficient to create a level playing field with the SEZ
units.
6.3
Other Stakeholder Feedback
The following sub-sections give a summary of the findings, which have been organized under a few
headings.
Strengthening the STP & EHTP Schemes
The export of software and IT enabled services should include all kind of products and services, excluding
those mentioned in a negative list to be declared in the Foreign Trade Policy (FTP). STP/EHTP Units should
be allowed to run/offer Disaster Recovery and Business Continuity Services. All types of IT services
should be included in the STP Scheme.
Many countries like China, Philippines, Ireland and Vietnam have become threat to the STP/EHTP units
located in India due to withdrawal of the existing tax benefits in our country, whereas such benefits are
available in other countries.
The existing STP and EHTP Schemes may be combined into a single scheme which should also cover
Infrastructure services. In fact, there is a need of reviewing the existing STP and EHTP schemes in order
to make it more relevant in the present context by:
• Streamlining the procedure for approval, extension /renewal of STP/EHTP unit;
• Making it a growth engine for Software, IT and IT Enabled Services as well as Electronic Hardware
and Manufacturing;
• Taking an integrated view of promoting domestic as well as export markets;
• Creating Software, IT and IT Enabled Services/Electronic Hardware Manpower and to train
professionals in the similar fields; and
• Creating IT Infrastructure for use by the entrepreneur of Software, IT and IT Enabled Services/
Electronic Hardware & Manufacturing.
The EHTP units should be allowed DTA sale at concessional duty without limit and trading and
warehousing of electronic and hardware goods for export should be included in the EHTP Scheme.
Procedural Aspects
The following points emerged from the industry consultation process in order to improve the existing
procedures under the STP / EHTP schemes:
• Export of an STP/ EHTP unit operating from Tier-II/Tier-II locations may be clubbed with FOB value
of exports of STP/ EHTP unit of same entity/owner operating in Tier-I city for the purpose of meeting
Export Obligations/Positive NFE of STP/ EHTP unit of Tier-II/Tier-III locations.
• Presently STP Unit may sell goods and services in the Domestic Tariff Area up to 50% of export on
payment of concessional duties. This limit should be removed.
• STP/EHTP units should be authorized to allow their employees to access communication links for
work purposes from their home and anywhere else outside the authorized STP/EHTP unit premises.
35
• While calculating foreign exchange outflow, the value of imports for which payments have been
made in Indian Rupees under High Sea Sales transactions should not be left out.
• The Market Development Assistance (MDA) should be extended to STP/EHTP not only to organize
road shows to attract clients, but also to open common representative offices overseas which can act
as the front office of the SME’s who are not able to open such offices on their own.
• STPI should function as a single window facility. The Jurisdictional Director, Software Technology
Parks of India may be authorised by the Reserve Bank of India to adjudicate under FEMA regarding
Export Certification.
• An STP/EHTP unit should be allowed to import and/or procure from DTA, all types of goods and
services without payment of duty, taxes or cess.
• Along with duty free Computers in STP/EHTP units other equipments should also be allowed to be
used for training purpose as required.
• As per As per 6.35.1 of Hand Book of Procedure, FTP Depreciation up to 100% is permissible for
Computers and Computer peripherals in 5 years and 10 years in case of other items. Depreciation of
100% should be allowed for all electronic items.
• Government should support Financial Institutions (FIs) evolving dynamic norms for risk financing
and Venture Capital.
• The Infrastructure Service Provider/IT Park should be allowed for duty free import and/or procure
from DTA all types of goods and services.
• If an industrial enterprise is operating both as a Domestic unit as well as an EHTP/STP unit,
maintenance of separate account should be sufficient for ensuring two distinct identities without
insisting on separate bank account.
• Introduction of a kind of “Soft Bonding” instead of existing Physical Bonding is required to ease the
operational issues.
• Services should be included as a part of sub-contracting. A blanket approval of 25% can be included
up-front and the same can be reviewed on quarterly basis for monitoring.
• Exit and de-bonding procedure should be made a single window process. The units having positive
NFE should be allowed to de-bond by paying only 25% of duty liability after applying the depreciation
notes.
•
All items (including construction material) free of duty should be allowed to IT Parks and the export
from the IT Park units should be considered as deemed export from the park for NFE calculation.
• EHTP units should be allowed DTA sale at concessional duty without limit and trading and
warehousing of electronic and hardware goods for export should be included in the EHTP Scheme.
Other Areas – R&D, Manpower Development & Patents
Research & Development
STP/EHTP Units should be encouraged to undertake R&D projects/activities and such units should be
given relaxation for Net Foreign Exchange (NFE). The R&D activity should be pursued through the
incubation facility of STPI, whereby the monitoring the effectiveness of the R&D can be measured. A
36
formula can be worked out to give the benefit to such units and accordingly adjust their NFE.
Manpower Development
Proper synergy between Industry and academia should be created so that the passing students could be
groomed to meet industry requirements. It is necessary to enhance skills (both technical and soft skills)
of young graduates to facilitate their employability. Specific focus may be given for Skill Development in
needed areas. The aim of the exercise should be to cut down the “deployable time” of fresh graduates.
STP/EHTP units can contribute towards manpower development for IT/ITES and ESDM industry. An
accreditation mechanism can be introduced by STPI for institutionalising the manpower development
activities of IT/ITES and ESDM training houses/industry. Active collaboration should be fostered between
STPI and Universities/Academia/High end Training Institutes to further expand the available world class
talent pool in the country.
Patenting
Many IT SMEs have created innovative products. But, due to absence of a patenting mechanism, there
are copyright issues. Hence, it is necessary to introduce a suitable patenting mechanism to boost the
development of products by SMEs.
6.4
Why Do We Need A Fresh Policy Intervention
The growth and sustenance of exports from any nation depend on the enabling policy environment,
besides other factors. The support of the STP Scheme enabled the IT/ITES and ESDM units in India
to grow in terms of revenues, exports and employment. Although such pro-active policies may not be
a sufficient condition for building successful IT/ITES and ESDM and Electronics export industry, all
successful countries have involved active Government support. The STP/EHTP schemes, that were
launched by Govt. of India to overcome infrastructural and procedural constrains played a seminal role
in making the STP/EHTP units highly successful.
Opponents of industry specific policy may point to the dismal record of Governments in supporting specific
sectors, and emphasize that the task be best left to market. However, countries that have succeeded have
generally seen their Governments making deliberate intervention to catalyze growth of specific sector.
Many of the policy enablers that have been found to be needed by the STP/EHTP units involve “NoRegret” interventions (such as manpower development, infrastructure etc.) that also benefit the rest of
the economy. As such a broad approach to policy, aimed at the overall business environment and not at
the IT/ITES and ESD industries specifically, is likely to miss key interventions and be out of sync with the
dynamic and special needs of these industries.
Given the fast moving nature of the IT/ITES and ESDM industries globally, the domain of policy and
investment promotion is a constantly moving target. Unless the Government schemes are agile it will be
difficult for the STP/EHTP units to adapt to changing market conditions and achieve and sustain success.
Withdrawal of income tax benefits was highly detrimental towards sustenance of STP/EHTP units at a
time when the profit of the STP/EHTP units had shrunk because of the appreciation of Indian Rupee and
cost pressures.
Policy intervention is also required for creation of a level playing field for the STP/EHTP units in an
environment created by setting up of SEZs. Although the IT/ITES and ESDM sector was opened to 100%
37
FDI under the STP/EHTP schemes there was no evidence of transactional corporation accumulating market
power. However with introduction of SEZs which has created advantage for TNC growth of innovative
STP/EHTP units will be severely affected.
In view of the above factors, it is strongly felt by the stakeholders that there is an urgent need for a
special policy for the IT/ITES and ESDMunits, which can be met by suitably revising the existing STP and
EHTP Schemes.
38
Recommendations
Recommendations The Sub-Group of the Inter-Ministerial Standing Committee was mandated with the task of suggesting
suitable steps in the following areas:
suggest appropriate measures for improvement in the STP scheme so that STPI can play a pro-active
role.
(b) To promote the growth of IT/ITES and ESDM industry in India.
the scheme etc.
2. To prepare guidelines to streamline the procedure for extension/renewal of LOP of ISPs, extension
of Private Bonded Ware House (PBWH) License for ISPs and also plug the loopholes.
Based on the overwhelming response of the stakeholders as well as the deliberations of the internal
meetings of the Sub-Group members, it is felt that the IT/ITES and ESDM exporting units need handholding
and incentivization so that their growth is not only stepped up but is also sustained over a period of
time. It is also felt that keeping in view the immense social and economic contribution of this sector, the
government needs to give a strong policy push in this direction. Further, STPI being the nodal agency
for promotion of STP/EHTP schemes it should be adequately strengthened and supported to implement
the recommendations adopted by the Government. A draft revised resolution on the STP / EHTP Schemes
prepared on the basis of the existing provisions and the recommendations of the IMSC Sub-Group is
therefore enclosed at Appendix VII.
The Sub-Group is making the following recommendations which are primarily divided into the following
five categories:
• Recommendations on Policy Measures;
• Recommendations on Promotional Measures;
• Recommendations on Handholding Measures;
• Recommendations regarding Direct Taxes;
• Recommendations regarding Indirect Taxes; and
• Recommendations regarding Infrastructure Service Provider.
8.1
Recommendations on Policy Measures
8.1.1 Promoting IT/ITES and ESDM Units beyond Tier I Locations
The development and growth of the IT/ITES and ESDM industry has largely become concentrated around
seven Tier-I locations, viz. Bangalore, Hyderabad, Chennai, Mumbai, Pune, Delhi-NCR Region and
Kolkata. There is an urgent need to expand the footprint of this sector beyond these cities. This will
have two positive impacts on the sector and on the nation as a whole. Firstly, it can trigger a general
socio-economic development in newer locations as was seen in the case of the Tier-I cities during the
41
past two decades. Secondly, by taking new ventures to these locations, the sector will be able to benefit
from lower infrastructural, operational and manpower costs, which is critical in view of the emerging
international competition from low cost destinations. The initial concentration of the IT/ITES and ESDM
units in these few urban areas had been due to the influx of skilled manpower to such cities and on
account of the availability of reliable internet connectivity. Over the years, these two constraints have
been overcome in other places and it is now possible to diversify the geographical location of these units.
However, this process of geographical dispersal needs to be duly incentivized through a suitable policy
push. Accordingly, the Sub-Group proposes full exemption from income tax for new units that come up in
the special category states of North-East, Jammu & Kashmir, Uttrakhand, Himachal Pradesh, Bihar and
Jharkhand and such other states declared by Government of India from time to time.
The Sub-Group also proposes full exemption from income tax for new units that are established within
the rural areas of other states subject to the conditions that the units are established as new independent
entities and employ a minimum of 100 skilled IT professionals. It is also suggested that the State
Governments should incentivize this process by liberal conversion of agricultural land to industrial land
meant for STP/EHTP units. STPI shall lay down necessary guidelines/ conditions so as to ensure that the
benefits of Income tax is granted to such units only if they qualify as a rural IT unit.
8.1.2 Level Playing Field with SEZ
During discussions in various forums, members from STPI/ EHTP units have stated that despite most
of them being MSMEs, STP/EHTP units have not been offered a level playing field with SEZ units. The
Sub-Group looked into their individual demands and found that although STP/ EHTP units could not
be equated to SEZ units in respect of each and every matter, the Sub-Group is of the opinion that the
following benefits now given to SEZ can be offered to STP/ EHTP units mutatis-mutandis without much
complications since almost equivalent benefits are being enjoyed by STP/ EHTP units but with lesser
operational convenience.
(a) SEZ units have no limit on DTA sale on payment of effective customs duties, so long as SEZ unit
achieves Positive NFE.
(b) SEZ units are exempted from duties of customs and excise on import or local procurement of all items
(without any specified list) as per their authorized operations.
(c) SEZ units are exempted from payment of Central Sales Tax on all items.
(d) All taxable services procured from DTA are exempt from Service Tax in case such services are utilized
inside the SEZ and Service Tax paid is reimbursed for services utilized outside the SEZ.
(e) Trading and warehousing activities are permitted in SEZ in absence of which EHTP units will face
hardships.
(f) Work from home is clearly permissible in case of SEZ units, which is little ambiguous in case of
STP/ EHTP units. This facility has now been extended by DGFT by way of Public Notice No. 5 (RE2013)2009-2014 dated 18th April 2013.
(g) Single window concept is effectively implemented in SEZs.
The Sub-Group feels that while MSMEs deserve an advantageous environment, a serious endeavour is to
be made now to at least relieve them from the present disadvantages of operating under the STP / EHTP
schemes since the intended outcomes of STP/EHTP and SEZ schemes are identical. Hence, necessary
42
modifications are recommended in the STP and EHTP schemes and relevant FTP/ Customs/ Excise
provisions in the above respect.
9.1.3 Unified Scheme
It was observed by the Sub-Group that the EHTP scheme (vide Government of India Notification No
42(N-8)92-97 dated 14th September, 1992) allows setting up of a unit for both software and hardware
in an integrated manner. The task force to suggest measures to stimulate the growth of IT/ITES and ESDM
industry in India with representatives from NASSCOM, ISA, ELCINA, CEAMA, ESC, ICA, TEMA and MAIT
in their report submitted to Government of India in 2009 had clearly stated in their vision that composite
and integrated growth of both sectors – software and hardware, is the only route to make India global
technology powerhouse. An unified approach has also been taken under SEZ scheme. The Sub-Group
therefore recommends that the STP scheme and the EHTP scheme should be combined to a single scheme
with due emphasis to one or the other sector as and where required and STPI as the implementing agency
should put equal thrust on both the sectors under a single scheme.
A single LOP should be issued to set up IT/ITES and ESDM unit without any restriction in areas of
operation except the areas in the negative list, if any. In case of confusion whether any particular area of
operation falls under the category of IT/ITES and ESDM the decision of the DG, STPI should be final.
9.1.4 Negative List
The list of products and services that are permitted to be undertaken by STP/EHTP units does not
include many new areas which have high potential of export such as testing & Integration, Disaster
Recovery, Knowledge Process Outsourcing (KPO), Business Process Management (BPM), Knowledge
Process Management (KPM), Remote Sensing, R & D etc. The Sub-Group feels that with the changing
technological and business scenario, the list will have to be continuously up-gradated and a stale list will
create unnecessary hassle for pioneering industries. As such, instead of listing the permissible areas of
export, this Sub-Group recommends creating a negative list indicating the restricted areas only.
7.1.5 Effective Single Window Mechanism
The single window clearance mechanism in STP/EHTP scheme has not been effective. STP/EHTP units
should be provided all statutory, promotional and support services through STPI as a single window
agency. The following recommendations are made in addition to existing provisions to make single
window mechanism more effective and useful to STP/EHTP units. Some other recommendations made in
this report will also aid to single window operation. Endeavour should be made to enact a single window
act so that all government agencies can at all levels – central, state, and local – function through this
single window in respect of matters relating to STP/EHTP schemes.
(a) The Jurisdictional Directors of Software Technology Parks of India who are designated officers of the
Department of Electronics and Information Technology (DeitY), Government of India shall implement
STP/EHTP Schemes in their respective jurisdictions which are notified by Software Technology Parks of
India from time to time. The Jursidictional Directors of STPI will exercise all the powers delegated by the
Department of Electronics and Information Technology and Inter Ministerial Standing Committee (IMSC)
through the Director General, STPI for implementation of the schemes. The Inter Ministerial Standing
Committee which is the apex body for formulation, relaxation and implementation of the STP/EHTP
schemes shall be notified by the DeitY with the Secretary, DeitY as the Chairman and Director General,
43
STPI as Member Secretary. Other members of the IMSC will include representatives of Department of
Commerce and Industry, Science & Technology, Electronics and Information Technology, CBDT, CBEC,
DGFT and Planning Commission.
(b) Director General, STPI will be delegated with the necessary powers to resolve all operational issues
through Jurisdictional Directors. Director General, Software Technology Parks of India shall also act as
first appellate authority over the decisions of Jurisdictional Directors in all matters relating to STP/EHTP
schemes. In case of any doubt as to whether any goods or services are required by the STP/EHTP unit/
Infrastructure Service Provider or not, it shall be decided by the Director General, Software Technology
Parks of India.
(c) Jurisdictional Director Software Technology Parks of India on behalf of DGFT shall allot ImporterExporter Code to the unit if the same has already not been allotted to the entity.
(d) Procedural problems faced by STP/EHTP units shall be sorted out by organizing open houses having
participation of local customs, excise, foreign trade, RBI and other field formation represented by officer
not below level of Deputy Secretary to Govt. of India.
(e) Jurisdictional Director, STPI shall allow Soft Bonding of premises of STP/EHTP Unit for the purpose
of availing duty free facility under which all duty free import /procurement/shifting/Inter Unit Transfer
related clearances will be on the basis of self-declaration subject to periodic examination by customs/
Excise authority.
(f) STP/EHTP units who are not availing duty free benefits will be allowed operation without soft bonding.
In the event of requirement of emergent steps to be taken by STP/EHTP units for Disaster Recovery and
Business Continuity, the decision of Director General, Software Technology Parks of India for relaxation
of norms of bonding, utilisation of goods and services and deployment of manpower made on technical
grounds will be final.
(g) Venture capital will be made available to STP/EHTP units through financial institutions by supporting
such institutions having dynamic norms for risk financing by creating a fund of funds. Credit ratings
agency will be empaneled for rating STP/EHTP units to enable them to obtain necessary capital from
financial institutions.
(h) Extension of benefits of export credit insurance through Export Credit Guarantee Corporation (ECGC)
at a very nominal/discounted premium to STP/EHTP units will be facilitated.
(i) Activities relating to up gradation of technology, enhancement of productivity, efficiency, skill, and
resources and standardization of quality, process, security and environment of STP/EHTP units will be
supported.
9.2
Recommendations on Promotional Measures
9.2.1 Trade Promotion
The most critical challenge faced by MSME units in the IT/ITES and ESDM sector is the marketing and
branding as well as the cost competitiveness. Meanwhile cost competitiveness of all rival countries
has been steadily increasing. At a time when the Indian IT industry is poised towards consolidating its
leadership position by entering newer markets and creating newer avenues, there is no denying the fact
that if suitable trade promotion support is not provided to the MSME units (who constitute a sizeable
segment of the industry), it would be detrimental to the growth of IT/ITES and ESDM Industry. Under
44
such circumstances, the country may lose its edge over other Asian neighbours. The Sub-Group feels
that the STP/EHTP units need strong promotional support in the following areas:
(a) Image building, advertising and advocacy;
(b) Marketing of domestic products through trade mission, trade fairs, trade shows and information
dissemination;
(c) Support services to local exporters, in order to assist enterprises in the planning and preparation for
international involvement, stimulating interest for export in the IT/ ITES and Electronics community,
acquire expertise and know-how necessary to enter export markets, provide organizational help and
cost sharing programs; and
(d) Conducting market research, identify targets and potential business partners.
The Sub-Group therefore recommends that suitable programme should be created by DeitY through STPI
for implementing the above measures, given the fact that countries across the world, both developed and
developing, are taking vigorous trade promotional activities as a prime contributor for the growth of their
own exports. Further, while offering the benefits of Market Access Assistance by the Government of India,
special attention should be given to the STP/EHTP MSMEs by making STPI a nodal agency under DeitY
as the Nodal Department for Scheme Implementation.
9.2.2 Angel / Venture Investment
Angel Investors drive significant early-stage investment in countries with high entrepreneurial activity.
Apart from capital, such Angel Investors also provide mentoring and network access to entrepreneurs.
They play critical role in scaling up business to make them attractive for institutional investment or
acquisition/merger. In order to attract Angel Investment in IT/ITES and ESDM units; such investors
should be allowed to act alone or in a formal or informal Angel groups with participation of domestic
and international investors. Angels should be exempted from capital gain tax in case of acquisition or
merger of start-up units funded by them. Hassle free exit provisions should also be made to encourage
early-stage investment by Angels. STPI should act as a single window agency for putting these measures
in place for IT/ITES and ESDM industries.
9.2.3 R&D Relaxations
Research and Development (R&D) activities leading to new product / process development require full
support. This will help the country in achieving leadership as well as in the substitution of imports.
However, many R&D activities do not culminate in product development and are required to be shelved.
Some such initiatives take much longer for their success. As such the committee feels that R&D units
should be allowed to meet their NFEP in 10 years or further extended periods in deserving cases. The
duty liability and penalty should be written off in the event of failure of R&D units to arrive at product
innovation. The units failing in their endeavour should also be allowed accelerated depreciation of their
capital investments. Further, R&D units approved under STP/EHTP scheme should also be allowed to
avail all benefits for their on-shore operation.
9.2.4 Preferential Procurement
With the increasing deployment of computers, software and electronics devices in various sectors; many
critical applications are vulnerable to cyber attacks. With the use of electronics and IT becoming more
45
pervasive, disruption of normal life and threat to life and property can be created by causing these
devices to malfunction. The country has suffered such attacks from outside in the past. Like malicious
software, malicious hardware can also be used to trigger attacks. It is therefore felt that software and
hardware products have security implications in the country and Government. Such products should
therefore preferably be procured from domestic developers having international quality. A comprehensive
policy guideline should be prepared and implemented in this regard.
In the event of such policy guideline in place STPI would maintain a database of products and services
of STP/EHTP units and help the Government agencies in identifying the appropriate product or service
provider for preferential procurement. Such database will also help in export promotion activities.
9.2.5 Maintaining an interactive website giving profiles of all Units
As a promotional measure, an interactive website for STP/EHTP units in the form of a Trade Portal
may be developed by STPI. This portal should provide access to reliable information by addressing the
entire spectrum of trade and support information among the other wings covering product profiles,
supplier profiles, country profiles of major trade destinations, global importer’s directory, world economic
environment, overseas market situation, trade fairs & exhibitions, market surveys (product-wise), trade
and investment policy, trade statistics, tariff and taxes, availability of funding, R&D, training and such
other services.
It should also include providing specialized services like video conferencing, language translation, virtual
office, virtual trade fair and in due course e-transactions.
9.3
Recommendations on Handholding Measures
9.3.1 Infrastructural Support
On the basis of various interactions with STP/EHTP units, the Sub-Group is of the opinion that the
MSMEs need lot of infrastructural support. It is therefore; recommended that STPI should take necessary
initiatives in respect of the following:
(a) Software Technology Parks (STP) and Electronics Hardware Technology Parks (EHTP) should be
created with primary focus of dispersal of IT/ITES and ESDM industry beyond Tier- I locations which
will help the industry to set up their units in such locations and achieve reduction in cost of their
services or products for better competitiveness.
(b) STPI should develop and maintain a suitable ICT Infrastructure based on Cloud for use of STP/ EHTP
units, primarily MSMEs located in STPI premises or outside.
(c) Most of the foreign customers demand a disaster recovery (DR) plan. MSMEs are not in a position
to develop their own disaster recovery infrastructure as the same attract huge cost. STPI should
therefore maintain DR facility in their premises for use of the MSMEs.
(d) STPI should develop required hard infrastructure (plug and play office space) for incubation support
in their premises as well as in educational institutions.
(e) The available talent pool in the country does not provide directly employable manpower which
necessitates in house training of personal in technical and soft skills areas. This attracts huge costs
for the MSMEs. STPI should therefore venture into skill development in niche areas in conjunction
with academic institutions and IT/ITES and ESDM industries for creation of a talent pool.
46
9.3.2 Venture Incubation
Incubators are institutions which help entrepreneurs to develop their ideas to a point where investors
(angel/venture) can see the viability of the business model. Incubators not only provide hard infrastructure
(plug and play office space) but also services such as mentoring, advisory, access to technology experts
and potentially seed funding. STPI needs to enhance their incubation program including setting up of
on-shore incubation facility to cater to all incubation and related needs of entrepreneurs.
9.3.3 Mentoring of MSMEs
As understood, MSMEs face difficulties in easy access to finance, international market and state-of-theart technology. However, in a situation where such units are mentored by bigger units, the MSMEs will
have huge advantage in positioning themselves in the export market. The Sub-Group, therefore, suggests
that the successful STP/EHTP units may be given an opportunity to mentor STP/EHTP MSMEs.
In order to incentivize such initiatives; STP/EHTP units with positive NFE mentoring at least three units
(with prior declaration to STPI) in order to bring them to a level of exporting Rs 10.00 Crore per annum
should be allowed to club the FOB value of export of the mentored units for reckoning the requirement of
status holder exporting/trading house.
9.4
Recommendations regarding Direct Taxes
9.4.1 Double Deduction of Expenditure for Value Addition for Infrastucture, Product Development,
IPR and R&D activities
The STP/EHTP units in general attributed their success largely to the incentive available in the form of
100% exemption from income tax on export profit. This income tax benefits to STP/EHTP units expired
with effect from 31st March, 2011.
The Sub-Group is of the view that as profit linked incentives are not being encouraged by the Government,
the existing STP/EHTP units, while computing their taxable income, should be allowed double deduction of
investments made for addition of value to the unit for infrastructure development, product development,
training of manpower, business promotion and marketing outside the country, R&D activities, quality/
security/ process/ environmental certification, technology up-gradation, IPR and patenting.
The Sub-Group also feels that for IT/ITES and ESDM industry, the primary investment is in the form of
salary to the manpower as these industries are knowledge based industry. Therefore, investment linked
incentives for these units should be linked to manpower cost. STP/EHTP MSMEs should therefore be
provided with investment linked incentives in the form of double deduction of salary for computation of
tax.
9.4.2 Depreciation Norms
The current provisions allow 100% depreciation of the value of Computer Systems and Computer
Peripherals over a period of five years. The period of depreciation for Capital Goods other than Computer
and Computer Peripherals is much longer.
Periodic technological up-gradation and fast obsolescence is an important feature of the IT industry. In
order to enable the units to upgrade, it is important to provide for shorter periods for 100% depreciation
47
than allowed under the existing provisions. The Sub-Group recommends that the period of four years for
100% depreciation be applicable to computers and computer peripherals as per the following break-up
(on a straight line basis):
•
•
•
•
10% for every quarter in the first year;
8% for every quarter in the second year;
5% for every quarter in the third year; and
2% for every quarter in the fourth year.
For other IT Capital Goods, including servers, networking equipments like Routers, Switches and
Telecommunication Equipments, DG sets, AC etc, this period should be five years with following rate of
depreciation (on a straight line basis):
•
•
•
•
10% for every quarter in the first year;
8% for every quarter in the second year;
5% for every quarter in the third year; and
1% for every quarter in the fourth and fifth years.
The Sub-Group further recommends that in case of UPS batteries and such other auxiliary items, which
have an average life up to three years, straight line depreciation of 100% should be allowed in three years
to avoid unnecessary blockage of valuable space of the units. Further, capital goods should be deemed to
have been de-bonded, once the period of 100% depreciation is over.
9.5
Recommendations regarding Indirect Taxes
9.5.1 Zero Duty in Raw Material/Components of Products under FTA/ITA1 Items Under various foreign trade agreements, the imports of finished goods are taxed at lower rates than
raw materials. This inverted duty structure impacts the domestic industry adversely as a manufacturer
has to pay a higher price for raw material in terms of duty, while the finished product lands at lower
duties, which leads to lower prices of imported goods. Users of imported raw material and components
are at a disadvantageous position due to the above inverted customs duty structure that makes them
uncompetitive against cheaper finished product imports and discourages domestic value addition.
Therefore, the Sub-Group recommends immediate relief of taxes and duties on all inputs which are
utilised by EHTP/STP units for manufacturing of products listed under FTA/ITA 1 and levy duty equal
to the import duty on finished product to provide domestic manufacturers a level playing field vis-à-vis
imports under free trade agreements.
9.5.2 Clubbing of NFE
In order to encourage STP/EHTP units operating in Tier-I locations to expand their activity beyond Tier-I
locations; an entity having STP/EHTP units operating from both Tier-I and beyond Tier-I locations may be
allowed to club their FOB value of exports for the purpose of meeting the export obligation in a combined
way. Similar facility may also be provided to STP/EHTP units in multiple locations. Maintenance of
separate business account even without separate bank account for each location should be sufficient for
separate identity of each business location of such units.
9.5.3 Use of Duty Free Goods for Training Purposes
Use of duty free Computers only in STP/EHTP units for training purpose (Including Commercial Training) is
48
allowed. The Sub-Group recommends that use of all duty free equipments/goods as allowed for STP/EHTP
units may also be permitted for training purpose subject to the condition that no duty free equipment will
be installed outside the STP/EHTP unit.
9.5.4 Inter-Unit Transfer of Inputs & Return of Goods to Unit in case of Rejection, without
Payment of Duty
A company, having multiple units, sources inputs centrally to obtain bulk discount, reduced cost of
transportation and other logistics cost and to maintain effective supply chain. Industry desires that
inter-unit transfer of inputs should be allowed among multiple units of a company. On the other hand
although Inter Unit Transfer of goods are allowed from one STP/EHTP unit to another without payment
of duty there is no provision, for return of such goods without payment of duty in case of rejection or
other reasons.
The Sub-Group feels that inter unit transfer of inputs need to be allowed and it is not reasonable to
demand duty on return of same goods which were removed without payment of duty
9.5.5 Procurement of Spares and Components up to 2% of the Value of DTA Clearances in the Preceding
Year, for After-Sales-Service in DTA
STP/EHTP units are allowed to procure spares and components, to the extent of 5 percent of the Free on
Board (FOB) value of the manufactured articles exported by the unit during the preceding year for after
sale-service of the exported articles to the same consignor or buyer to whom manufactured articles are
exported.
Since they are allowed DTA sale, similar requirement may also arise for supply of spares and components
for after sales service of the articles cleared into DTA. Hence, these units should also be allowed to
procure spares and components to the extent of 2 percent of the value of manufactured articles cleared
into DTA during the preceding year for after-sale-service or the same articles to the same consignor or
buyer to whom manufactured articles were cleared in DTA.
9.5.6 Single Reporting
Presently, the units under STPI/EHTP schemes have to file separate returns to STPI and the Central Excise
Department. This requires extra and avoidable compliance effort. It is recommended that a single return
form should be devised which can be filed with both departments. The form should be compatible with
the electronic filing system of Central Excise as well as the computerised system of STPI which is under
development.
9.5.7 Sharing of Infrastructure among STP/EHTP Units
Sometimes, the capital goods and equipment procured by STP/EHTP units are not fully utilized capacity
due to changes in the business circumstances. In order to enable the utilization of such idle capacity,
sharing of the same may be permitted among different STP/EHTP units without dilution of obligation
of the owner of the goods and equipments. Further, the infrastructural facilities created by STP unit (for
example air-conditioning or water treatment etc) may be permitted to be used by another STP/EHTP unit,
while keeping intact the obligation with the owner.
9.5.8 Import of Second Hand Goods for Testing
49
A number of STP/EHTP units are required to import old equipment for the purpose of testing and
this equipment may be required to be re-exported after testing or may have to be scrapped. Import of
such equipment often runs into problems because of the e-waste guidelines issued by the Ministry of
Environment and Forest. Suitable amendment needs to be made in these guidelines and relevant customs
notifications, so that the import of old equipment by an STP/EHTP unit for the purpose of testing can be
facilitated.
9.5.9 Easy De-Bonding Procedure
There are a number of units established under the STP/EHTP scheme which have not availed any
Customs/Central Excise duty benefits at all. It has been reported that such units have to face a number of
procedural issues with the Central Excise department at the time of their de-bonding. Since these units
have not availed any duty benefits, they need to be provided a simplified exit route from the STP/EHTP
scheme. It is recommended that suitable simplified procedure should be adopted where such units are
able to avail automatic exit route subject to necessary certificate from the STPI.
Further, in case of importing units if the value of imported goods have been depreciated to zero and such
units have achieved positive NFE similar easy debonding should be allowed.
9.5.10Dedicated Central Excise Divisions for STP/EHTP Units
During the stakeholders’ consultations, a very large number of units reported that the unique problems of
STP/EHTP units are often not appreciated by the Central Excise officers, mostly due to lack of understanding
of technological issues and the functioning of units in the IT industry. It was also reported that in case
of multi-location units within the same city, there are issues of difference in practice due to differences
in the understanding of same issues by different officers of different divisions. STP/EHTP units do have
their unique problems which require quick resolution. Therefore, the Sub-Group recommends that all the
STP/EHTP units (initially, those located in the cities of Bangalore, Hyderabad, Chennai, Mumbai, Pune,
Delhi-NCR Region and Kolkata) may be brought under a single specialized Central Excise division. This
will ensure a uniformity of approach and understanding as well as faster resolution of the problems
faced by these units. For even further facilitation, such Central Excise divisions could be housed in the
STPI offices so that all services can be delivered from a single location
9.6
Recommendations regarding Infrastructure Service Provider
9.6.1 Incubation, Training, DR and R&D Service providers at par with ISP
Like the infrastructure such as IT Parks, MSMEs are not in a position to develop their own disaster recovery
infrastructure, training facility or R&D facility as the same attract huge cost. However, these supports are
indispensable for growth of globally competitive STP/EHTP units. As such, in order to promote service
providers willing to provide these services, they should be given all the benefits given to Infrastructure
Service Providers (IT Parks) and such units should also be treated as ISP for all purposes.
9.6.2 Review of Customs Notification 153/93
As per Govt. of India notification no 33/ (RE)/92-97 dated 22nd March, 1994 a Software Technology Park
(STP) may be set up by the Central Government, State Government, Public or Private Sector Undertakings
or any combination thereof. A STP may be an individual unit by itself or it may be one of such units
50
located in an area designated as STP Complex by the Department of Electronics. Similarly as per Govt.
of India notification no 42(N-8)92-97 dated 14th September, 1992 an Electronic Hardware Technology
Park (EHTP) may be set up by the Central Government, State Governments, public or private sector
undertakings or any combination thereof. An EHTP may be an individual unit by itself or it may be one
of such units located in an area designated as an EHTP.
The said Government of India notifications stated that an STP unit may import, free of duty, all types of
goods including capital goods. The duty exemption shall also apply to goods imported by the Software
Technology Parks of India society for creating the central facility for use by Software Development units
in the STP Complex. An EHTP unit may also import free of duty all types of goods, including capital
goods required by it for its production, provided they are not prohibited items in the Negative List of
Imports of the Export and Import Policy
The IMSC has been approving proposals of ISPs for setting up of IT Parks on the basis of the above
notifications. However, the corresponding notification of Customs vide no 153/93-Cus, dated the 13th
August, 1993 has limited exemptions of Customs duty on Import of Telematic Infrastructural Equipments
under Broad categories of Telecommunication Transmission Equipments, Terrestrial Equipments, Satellite
Communication equipments, Data Communication equipments, Automatic Data Processing Machines
and units for Telematic equipment only. The Principal notification was amended vide 71/2000-Cus. Date
22/05/2000 to include others like UPS, Diesel Generating Set, Servo Control System, Air-Conditioner,
PABX, Fax Machine, Video Projection System, Security System, Computer Furniture Tool, Kits and Spares
only.
Further, there is no provision for De-bonding in the existing notification which creates lots of inconvenience
for the ISP as the technological obsolescence is very fast in case of Telematic Infrastructure. The Importer
has to pay full duty on the Imported Goods at the time of De-bonding which is an added liability when
the equipments are of no use.
More than that, unfortunately, no excise notification was issued as a counterpart of 153/93 making way
for ISPs to get duty benefits on domestic procurements.
Hence the Sub-Group recommends that necessary notification should be issued by customs and excise
departments permitting the ISPs to import and/or procure from DTA, all types of goods and services
required for setting up and maintenance of the infrastructure facility without payment of duty, taxes or
cess. Applicability of procedures/benefits to STP/EHTP units on import or DTA procurement of goods and
services and their utilisation, depreciation disposal or de-bonding should be mutatis-mutandis applicable
to the infrastructure service provider.
9.6.3 Removal of Scope of Loopholes in Provisions for ISP
MSME are usually not having their own infrastructure and therefore are devoid of state-of-the-art IT Park
facility to enhance their productivity. Although STPI maintains infrastructure for use of MSMEs those
are not sufficient. The Sub-Group therefore feels that infrastructure service providers should be duly
encouraged for developing state-of-the-art IT Park infrastructure for use of MSMEs. However, presently
the relevant rules and regulations pertaining to ISP are not very clear which may create loopholes in
handling various matters relating to ISP. The Sub-Group therefore recommends that the following
provisions should be made to facilitate setting up of IT Parks and other infrastructure support as well as
to eliminate the loopholes created by lack of clarity in the provisions:
51
1. Application of infrastructure Service Provider for setting up of IT Park/R&D facility/ DR&BC facility
/ Training facility in prescribed form with relevant documents will be submitted to the concerned
Jurisdictional Director of Software Technology Parks of India, which after examination will be
forwarded to IMSC for their consideration through Director General, Software Technology Parks of
India.
2. On approval, the Letter of Permission issued to the ISP by the Jurisdictional Director, STPI shall
be valid for a period of three years within which time the Infrastructure facility should become
operational by commencement of production by at least one unit from the infrastructure facility.
Validity of approval may be extended further, in deserving cases, up to 3 years by the Jurisdictional
Director, STPI. Extension of approval beyond six years in deserving cases without commencement of
operation can be considered by IMSC. Permission required for addition of area, Decrease/De-bonding
of area will be given by Jurisdictional Director, STPI
3. Once the ISP facility commences production, approval issued shall be valid till the approval is
cancelled / revoked by IMSC on the recommendation of Jurisdictional Director, STPI for non compliance
of obligations.
4. Applicability of procedures to STP/EHTP units on import or procurement of goods and services and
their utilisation, depreciation, disposal or de-bonding shall be mutatis-mutandis applicable to the
infrastructure service provider
5.
Minimum of 50% of total approved facility of ISP should be utilized by STP/EHTP units.
6. The ISP shall be allowed to import or procure from domestic tariff area, without payment of duty,
taxes or cess. all types of goods and services including capital goods (new or second hand), raw
materials, semi-finished goods, components, consumables, spares and materials connected directly
or indirectly with approved operations as per LOP except prohibited items under the import Trade
Control (Harmonized System) Classification of Export and Import Items.
7.
The exemptions from payment of duty, taxes or cess, on all types of goods and services imported or
procured from domestic tariff area should be allowed for setting up and maintenance of Building
and allied infrastructure, by the Infrastructure Service Provider or the contractors appointed by the
Infrastructure Service Provider, and all the documents in such cases should bear the name of the
Infrastructure Service Provider along with the contractor and these should be filed jointly in the
name of the Infrastructure Service Provider and the contractor.
8.
Infrastructure set up by Government or Government agency and STP and EHTP complexes set up by
STPI shall be entitled for all the benefits of Infrastructure Service Provider.
9. Exemption on all types of goods and services, required for setting up and maintenance of the
Infrastructure Service facility should be applied to the Jurisdictional Director, STPI along with the list
of goods and services, including machinery, equipments and construction materials duly certified
by the Chartered Engineer for approval by the Jurisdictional Director. The ISP will submit quarterly
return for procurement, consumption and utilization of goods and stock in balance.
10. In case of any doubt as to whether any goods or services are required by the Infrastructure Service
Provider or not, it shall be decided by the Director General, Software Technology Parks of India.
52
11. Infrastructure Service Provider shall execute an LUT with concerned Jurisdictional Director of STPI.
Failure to abide by any of the terms and conditions of LUT shall render the unit liable to penal action
under provisions of the FT (D&R) Act and Rules and Orders made there under, without prejudice to
action under any other law / rules and cancellation or revocation of LOP.
12. Where such Infrastructure Service Provider does not utilize the goods or services on which exemptions,
drawbacks, cess and concessions have been availed or unable to duly account for the same, they
shall refund an amount equal to the benefits of exemptions, drawback, cess and concessions availed
without prejudice to any other action under the relevant provisions of the Customs Act, 1962 Central
Excise Act 1944, CST Act the Foreign Trade (Development and Regulation) Act, 1992 and action may
be taken as deemed fit under the provision of laws of Govt. of India.
13. The Infrastructure Service Provider shall not remove duty free goods from the approved premises to
the Domestic Tariff Area except with the permission of the Jurisdictional Director, STPI and customs
and on payment of duty applicable on such goods.
14. Infrastructure Service Provider being not directly involved with export activity shall be relived from
export obligation.
15. Foreign equity up to 100% is permitted in the case of Infrastructure Service Provider
9.7
Actions Required on the above Recommendations
Recommendations in Brief
Ministry/Department
Action Required
Promoting IT/ITES and ESDM
Units beyond Tier I locations.
DeitY, CBDT(DOR),M/Finance/
Amendment of IT Act &
Enabling provision in Policy
Level playing field with SEZ
DeitY, DGFT (M/Commerce), CBDT, CBEC
(DOR), M/Finance
Policy amendment,
Notification to be amended
Single window clearance
DeitY, DOR, M/Finance DGFT (M/
Commerce),
Policy amendment,
notification to be issued
Power of IMSC and
delegation
DeitY & M/Commerce
Policy amendment, Revised
Physical bonding and
procurement certificate
CBEC,DOR, M/Finance, DGFT (M/
Commerce),
Policy amendment, Revised
Unified scheme
(DOR), M/Finance
Policy amendment,
Negative List
(DOR), M/Finance
Policy amendment,
Revised Resolution on STP/
EHTP Schemes
(DOR), M/Finance
Policy amendment,
Undertaking trade promotion
measures for STP/EHTP units
DeitY
Enabling Provision with
Budgetary Support to be made
Commerce & State Govt.
53
Ministry/Department
Action Required
Angel/Venture Investment
DeitY , FIs, Venture Capitalists & Banks
Infrastructural Support
DeitY Enabling Provision with
Budgetary Support required
Venture Incubation &Seed
Funding
DeitY , FIs & Banks
Budgetary Support required
Credit Rating agencies
DeitY, STPI, CR Agencies
Empanelment and Enabling
Provision to be made
R & D Relaxations
CBEC (DOR), M/Finance, DGFT (M/
Commerce)
Policy amendment,
Establishing a fund of funds
DeitY Enabling Provision with
Open houses for STP/EHTP
units
DeitY, CBDT, CBEC (DOR), M/Finance,
DGFT (M/Commerce), RBI
Budgetary Support with
Circular/notification to be
issued
Preferential Procurement
DeitY
Notification to be issued
Trade Facilitation
DeitY ,ECGC
Budgetary Support to be
made
Support for achieving
Quality, Process, Security
and other standards
certification
DeitY
Maintaining an interactive
website
DeitY, STPI
Infrastructural Support
DeitY, STPI
Venture Incubation
DeitY, STPI
Mentoring of MSMEs
Deity, CBEC (DOR), M/Finance, DGFT (M/
Commerce)
Enabling Provision with Policy
amendment, Notification to
be amended
Double deduction of
expenditure for Value
Addition and Consideration
of Salary & Wages in
Investment linked Income
Tax benefits
CBDT(DOR),M/Finance
Amendment of IT Act
54
Ministry/Department
Action Required
Depreciation norms
DGFT (M/Commerce), CBEC (DOR), M/
Finance
Policy amendment, Customs &
Central Excise Notification to
be amended
FTA/ITA1 Items at Zero Duty
Finance
be amended
Clubbing of NFE of STP units
of tier-I & tier-II locations
CBEC, DOR, M/Finance, DGFT (M/
Commerce),
Policy amendment,
Use of duty free goods for
Training Purposes
Finance
be amended
Inter-Unit Transfer of Inputs
among Group companies
& Return of goods/services
to unit, in case of rejection,
without payment of duty
Finance
be amended
Procurement of spares and
components up to 2% of the
value of DTA clearances
Finance
be amended
Single reporting
DeitY, STPI, CBEC (DOR), M/Finance
Circular/Notification to
be issued with Enabling
Provision
Sharing of Infrastructure
among STP/EHTP unit
Finance
be amended
Import of second hand goods
for testing
Finance, MoEF
Policy amendment, Customs
& Central Excise Notification
to be amended & MoEF
guidelines to be relaxed
Easy de-bonding procedure
Finance
be amended
Dedicated Central Excise
Divisions for STP/EHTP Units
CBEC (DOR), M/Finance, DeitY
Provision of Resources &
Manpower to be made
Incubation, Training,
DR and R&D Service
providers at par with ISP
Finance
be amended
Review of Customs
Notification 153/93
CBEC (DOR), M/Finance, DGFT (M/
Commerce)
Customs & Central Excise
55
Appendices
57
Appendices
Notification of the STP Scheme
.............................................................................................. 59
Notification of the EHTP Scheme
.............................................................................................. 62
National Policy on Electronics 2012;
National Policy on Information Technology 2012
& National Telecom Policy 2012
.............................................................................................. 65
Proceedings of the Open Houses
.............................................................................................. 71
List of Relevant Circulars & Notifications
.............................................................................................. 89
Industry Response to Questionnaire
..............................................................................................
92
Draft Resolutions
..............................................................................................
147
Public Notice with respect to Work from Home
..............................................................................................
159
58
Appendix I
Notification of the STP Scheme
GOVERNMENT OF INDIA
MINISTRY OF COMMERCE
NOTIFICATION NO.33/ (RE)/92-97
NEW DELHI, DATED 22 ND MARCH 1994
Subject: Software Technology Parks (STP) Scheme
1.0 In exercise of the powers conferred in Sub-section (1) of Section-3 of the Foreign Trade (Development and
Regulation) Act, 1992, the Central Government hereby notifies the following scheme, which is a sequel to the
Resolution No. 17(38)/Comp/84 (Part) dated December 18, 1986 of Department of Electronics announcing the
policy on Computer Software, Software Development and Training and also Resolution No. 17(38)/Comp/93 dated
February 22, 1993 of Department of Electronics for Software Exports.
2.0 Software Technology Parks (STP) Scheme
2.1 The Software Technology Park (STP) Scheme is a 100% Export Oriented Scheme for undertaking of Software
Development for Export using data communication link or in the form of physical exports including export
to professional services.
2.2 A Software Technology Park (STP) may be set up by the Central Government, State Government, Public or
Private Sector Undertakings or any combination thereof. A STP may be an individual unit by itself or it may
be one of such units located in an area designated as STP Complex by the Department of Electronics.
2.3 The Scheme is administered by the Department of Electronics, Government of India, through Directors
of respective Software Technology Parks which form part of the Software Technology Parks of India, a
society established by the Department of Electronics, Government of India and registered under the Society
Registration Act 1860. An application in the prescribed format for establishing a Software Technology Park
unit is to be submitted to the Chief Executive of Software Technology Park Complex along with the details
of the Software project. Such applications will be considered by an Inter-Ministerial Standing Committee
(IMSC) constituted under the Chairmanship of Secretary, Department of Electronics, Government of India
notified vide Gazette Notification No. 294 dated August 31, 1991 published in Sub Section-1 of section 3 of
Part II of Extra Ordinary Gazette of India and reconstituted by the notification of Ministry of Industries vide
Gazette Notification No. S.O. 177(E) dated February 22, 1993 published in Part II Section 3 Sub-section (ii)
of Extraordinary Gazette of India.
2.4 An STP unit may import free of duty all types of goods including capital goods. The duty exemption shall
also apply to goods imported by the Software Technology Parks of India society for creating the central
59
facility for use by Software Development units in the STP Complex. The capital goods imported on loan
from their client for a specified period executing the specific project shall also be allowed to the STP
units.
2.5 An STP will be a duty free and bonded area under section 25 of the Custom Act 1962. The Custom duty
exemption will be applicable as per custom notification No.138, 139, 140 and 141-Custom/91 dated October
22, 1991 and as amended time to time.
2.6 The entire software developed by STP Unit shall be exported except the sales in the Domestic Tariff Area
(DTA). The sales in the DTA shall be permissible up to 25% of the production in value terms made by the
STP unit.
2.7 The following supplies shall be counted towards the fulfilment of the export obligation of the export
obligation of the STP unit.
2.7.1 Supplies affected in DTA under global tender conditions;
2.7.2 Supplies affected in DTA area against payment in foreign exchange;
2.7.3 Supplies against Advance Licences and other import licences;
2.7.4 Supplies made to other STP units;
2.8 The STP unit shall be eligible for the following benefits:
2.8.1 TAX HOLIDAY
The STP will be exempted for payment of corporate income tax for a block of five years in the first eight years of
its operation.
2.8.2 100% FOREIGN EQUITY
Foreign equity up to 100% is permissible in the case of STP units, subject to approval of the FIPB.
2.9 Supplies made from DTA to STP unit may be eligible for such benefits as may be notified separately.
2.10 The provisions of paragraph 111 to 117 of Chapter IX of the Export and Import Policy (1992-97) applicable
to Export Oriented Units (EOUs) and units in Export Processing Zone (EPZs) shall also apply mutatismutandis to STP Scheme subject to the following modifications:
(a) The words ‘Development Commissioner’ wherever it occurs shall be substituted by the word ‘Chief
Executive of STP society’.
(b) The word ‘BOA’ wherever occurs shall be substituted by the letters ‘IMSC’.
2.11 Export obligation on the STP unit on net foreign exchange terms in US dollar value will be as follows:
Export Obligation = 1.5 x (CIF value of the hardware imported) + 1.5 x wage bill.
NOTES:
60
(i) The obligation on the hardware part will be fulfilled over a period of four years.
(ii) The obligation on wage bill will be on annual basis.
(iii) Net foreign exchange for this purpose will be defined as below:
“Net Foreign Exchange earned for this purpose is defined as foreign exchange inflow as a result of
Software Export less foreign exchange outflows on account of all expenditure whatsoever other than
initial hardware.”
2.12 Use of Computer System in STP for training purpose is also allowed subject to the condition that no
computer terminal will be installed outside the STP for this purpose.
3.0 This scheme is separate from the EOU/EPZ Scheme incorporated in Chapter IX of the Export and Import
Policy (1992-93). The provisions of STP Scheme contained in this notification shall not be applicable to the
Software Units established in accordance with the EHTP Scheme notified vide Notification No. 42(N-8)/9297 Dated 14th September 1992 and software units established in an EPZ or an EOU
This issues in public interest.
Sd/(Dr. P. L. SANJEEV REDDY)
DIRECTOR GENERAL OF FOREIGN TRADE
EX-OFFICIO
ADDITIONAL SECRETARY TO THE GOVERNMENT OF INDIA
Copy to all concerned.
By Order etc.
Sd/(P. VENKATASEN)
DY. DIRECTOR GENERAL OF FOREIGN TRADE
(Issued from File No. 3/195/93-IPCC-II)
61
Appendix II
Notification of the EHTP Scheme
GOVERNMENT OF INDIA
MINISTRY OF COMMERCE
NOTIFICATION NO. 42(N-8) 92-97
NEW DELHI: DATED THE 14TH SEPTEMBER, 1992
Subject: Electronic Hardware Technology Park (EHTP) Scheme In pursuance of the powers vested in sub-section (1) of section 3 of the Foreign Trade (Development and
Regulation) Act, 1992, the Central Government hereby rectifies the following scheme for building up a strong
electronics industry in the country with focus on enhancing its export potential and developing an efficient
electronic component industry in the county.
2. This scheme shall be called the Electronic Hardware Technology Park (EHTP) Scheme.
3. An Electronic Hardware Technology Park (EHTP) may be set up by the Central Government, State
Governments, public or private sector undertakings or any combination thereof. An EHTP may be an
individual unit by itself or it may be one of such units located in an area designated as an EHTP. 4. The Scheme will be administered by the Department of Electronics, Government of India, New Delhi. An
application for establishing an area to be designated as an EHTP or for setting up a unit within an area
designated as EHTP or for setting up an individual unit as an EHTP may be made to the Department
of Electronics. Such application will be considered by an Inter-Ministerial Standing Committee
(IMSC) constituted under the chairmanship of the Secretary, Department of Electronics.
5. An EHTP unit may import free of duty all types of goods, including capital goods required by it for its
production, provided they are not prohibited items in the Negative List of Imports of the Export and Import
Policy (1992-97). Second-hand capital goods may also be imported by EHTP units in accordance with
the policy. 6. An EHTP will be a duty-free and bonded area under Section 25 of the Customs Act, 1962. For the purpose
of Customs Duty Exemption a suitable notification will be issued.
7. The entire production of an EHTP unit shall be exported to hard currency areas except the sales in the Domestic
Tariff Area (DTA) according to the following norms :-
62
Value addition achieved by the EHTP
Permissible sale in the Domestic Tariff Area (DTA)
(a) Less than 15%
Nil
(b) 15%-25%
i. Up to 25% of the production in value terms of
finished equipment developed or manufactured by
the EHTP unit.
ii. Up to 30% of the production in value terms of
components and electronic materials manufactured
by the EHTP unit.
(c) More than 25%
i.
Up to 30% of the production in value terms of
finished equipment developed or manufactured
by the EHTP unit.
ii.
Up to 40% of the production in value terms of
components and electronic materials manufactured
by the EHTP unit.
Note: - 1. If the item to be sold in the DTA is in the Negative List of Imports of the Export and Import
Policy (1992-97), the sale to the purchaser in the DTA will be subject to the payment of excise
duty, sales tax and other applicable taxes. The excise duty payable will be equivalent to the full
customs duty applicable on the import of that item into the country. The DTA sale of such items
does not, however, require a licence.
2. If the item to be sold in the DTA is not in the Negative List of imports of the Export and Import
Policy (1992-97), the sale to the purchaser in the DTA will be subject to the payment of excise
duty, sales tax and other applicable taxes, but the excise duty payable will be equivalent to half
of the customs duty applicable on the import of that item into the country.
3. An EHTP unit may bunch the products manufactured by it for sale in the DTA within its
entitlement.
8. 9. The following supplies shall be counted towards fulfilment of the export obligation of the EHTP units:(a) Supplies affected in DTA under global tender conditions;
(b)
Supplies affected in DTA against payment in foreign exchange.
(c)
Supplies against Advance Licences and other import licences;
(d)
Supplies made to other EHTP units with the permission of the officer designated by the Department
of Electronics, Government of India. The EHTP unit will be eligible for the following benefits:(i) Tax holiday - The EHTP will be exempted from payment of corporate income-tax for a block of five
years in the first eight years of its operation.
(ii) Clubbing of Net Foreign Exchange (NFE) - The NFE earned by an EHTP unit can be clubbed with the
NFE of its parent/associate company in the DTA for the purpose of according Export House/Trading
House/Star Trading House status for the latter. NFE for this purpose will be calculated according
to the formula given in para 138 of Chapter XII of the Export and Import Policy (1992-97).
63
(iii) 100 per cent foreign equity- Foreign equity up to 100 per cent permissible in the case of EHTP
units. 10. Supplies made from the DTA to an EHTP unit will be regarded as deemed exports and will be eligible for
the benefits specified in paragraphs 106 and 122 of the Export and Import Policy (1992-97). Such benefits
shall be available provided the goods supplied to the EHTP unit are manufactured in the country and
the supplies are made against a letter of authority issued by an officer designated in this behalf by the
Department of Electronics, Government of India.
11. The provisions of paragraphs 96,104,105,109,110 and 111 to 117, Chapter IX of the Export and Import
Policy (1992-97) applicable to Export Oriented Units (EOUs) and units in Export Processing Zones (EPZs)
shall also apply to the EHTP units subject to the following modifications:
(a) The word “EHTP” shall be substituted for the words “EOU/EPZ” or “EOU” or “EPZs”, wherever they
occur, in these paragraphs.
(b) The words “Development Commissioner”, wherever they occur, shall be substituted by the words
“the officer designated by the Department of Electronics, Government of India”.
(c) 12.
The word “BOA, wherever it occurs, shall be substituted by the word “IMSC”. Value addition for the purpose of this scheme shall be expressed as a percentage and shall be calculated
for a period of five years according to the following formula:
Value addition = (A - B)/A X 100 Where A is the FOB value of exports realised by the EHTP unit.
B is the sum total of the CIF value of all imported inputs, the CIF value of all imported capital goods and
the value of all payments made in foreign exchange by way of commission, royalty, fees or any other
charges. “Inputs” means raw materials, intermediates, components, consumables, parts and packaging
materials.
13. An EHTP unit may be set up for both software and hardware in an integrated manner subject to the
condition that the minimum value addition for the software components will be 60 per cent and the DTA
sale of software shall be restricted to 25 per cent of the production of software in value terms. 14. This scheme is separate from the EOU/EPZ scheme incorporated in Chapter IX of the Export and Import
Policy (1992-97). In respect of an electronic unit established in an EPZ or as an EOU under Chapter IX of
that policy, the provisions of that Chapter will apply.
15. This notification is issued in public interest.
-Sd/(D. R. MEHTA)
CHIEF CONTROLLER OF IMPORTS & EXPORTS
Copy to all concerned.
64
Appendix III
National Policy on Electronics 2012; National Policy on Information
Technology 2012 & National Telecom Policy 2012
National Policy on Electronics
Preamble
Electronics Industry reported at $ 1.75 Trillion is the largest and fastest growing manufacturing industry in the
world. It is expected to reach $ 2.4 Trillion by 2020. The electronics manufacturing is characterized by high
volume and low margins. All these have resulted in the electronics hardware industry being globally integrated
with few large global players catering to a large part of the world.
The demand in the Indian market was $ 45 Billion in 2008-09 and is expected to reach $ 400 Billion by 2020.
Domestic demand is expected to be driven by growth in income levels leading to higher off-take of electronics
products, automation demands of corporate sector and the government’s focus on e-Governance. The domestic
production in 2008-09 was about $ 20 Billion. However, the actual value-addition in the domestically produced
electronic product is very low, ranging between 5 to 10 percent in most cases. At the current rate of growth, the
domestic production can cater to a demand of USD 100 Billion in 2020 as against a demand of $ 400 Billion and
the rest would have to be met by imports. This aggregates to a demand supply gap of nearly $ 300 Billion by 2020.
Unless the situation is corrected, it is likely that by 2020, the electronics import may far exceed oil imports.
It is also pertinent to note that Indian electronics hardware production constitutes only around 1.31% of the
global production. India is a recognized global player in software and software services sector. It lags behind in
electronics hardware manufacturing capabilities, though it is increasingly becoming a destination for chip design
and embedded software.
Electronics is characterized by high velocity of technological change. Consequently the life cycle of products is
declining. As a result, the value of design and development in the product has increased quite significantly. ESDM
is of strategic importance as well. There is potential to develop the ESDM sector to meet our domestic demand as
well as to use the capabilities thus created to successfully exports ESDM products from the country. The electronic
components, which are basis of an electronic product, are low volume-low weight, cheap and easy to transport
across the globe. Moreover, under Information Technology Agreement-1 (ITA-1) of the World Trade Organization,
which came into force in 1997, a large number of electronic components and products are bound with zero tariffs
making trade unrestricted across international borders. India is one of the fastest growing markets of electronics
in the world.
The National Policy on Electronics 2012 aims to address the issue with the explicit goal of transforming India
into a premier ESDM Hub.
Vision
To create a globally competitive electronics design and manufacturing industry to meet the country’s needs and
65
serve the international market.
Mission
• To promote indigenous manufacturing in the entire value-chain of ESDM for economic development.
• To develop capacities for manufacture of strategic electronics within the country.
• To promote a vibrant and sustainable ecosystem of R&D, design and engineering and innovation in
Electronics.
• To develop high-quality electronic products at affordable prices for inclusive adoption and deployment to
improve productivity, efficiency and ease of operations in other sectors.
• To promote environmentally friendly global best practices in the use and disposal of electronic products.
Objectives
(a) To create an eco-system for a globally competitive ESDM sector in the country to achieve a turnover of about
USD 400 Billion by 2020 involving investment of about USD 100 Billion and employment to around 28
Million people at various levels.
(b) To build on the emerging chip design and embedded software industry to achieve global leadership in VLSI,
chip design and other frontier technical areas and to achieve turnover of USD 55 Billion by 2020.
(c) To increase the export in ESDM sector from USD 5.5 Billion to USD 80 Billion by 2020.
(d) To significantly enhance availability of skilled manpower in the ESDM sector. Special focus for augmenting
post graduate education and to produce about 2500 PhDs annually by 2020.
(e) To create an institutional mechanism for developing and mandating standards and certification for electronic
products and services to strengthen Quality Assessment infrastructure nationwide.
(f) To develop an appropriate security ecosystem in ESDM for its strategic use.
(g) To create long-term partnerships between EDSM industry and strategic sectors like Defence, Space, and
Atomic Energy etc.
(h) To become a global leader in creating Intellectual Property (IP) in the ESDM sector by increasing fund flow for
R&D, seed capital and venture capital for start-ups in the ESDM and nano-electronics sectors.
(i) To develop core competencies in sectors like automotive, avionics, industrial, medical, solar, Information and
Broadcasting etc through use of ESDM in these sectors.
(j) To use technology to develop electronic products catering to domestic needs and conditions at affordable
price points.
(k) To expedite adoption of best practices in e-waste management
(l) To create specialized governance structures within Government to cater to specific needs of the ESDM sector
including high velocity of technological and business model changes.
(m)To facilitate loans for setting up ESDM units in identified areas
66
National Policy on Information Technology
Preamble
Information Technology is a key driver of an increasingly knowledge based global economy. The Indian economy
has achieved a growth rate of around 8 % over the last decade, and the contribution of IT Sector to this growth
is significant. The Indian IT industry has a size of $ 88 Billion (2010-11) with 80% of the revenues coming from
exports. The Indian IT & ITES sector employs over 2.5 million skilled people. The IT sector has been one of the
major employment generators in the last two decades.
The global IT-ITES market has been growing. However, the bulk of Indian IT exports are still targeted towards
North America and Europe. Further, the current flux in the global economy highlights the need for constant
reappraisal of strategy and the imperative of identifying new markets and new services and seeking ways to
leverage and extend the reach of domestic non-IT services. While IT export growth is satisfactory despite global
recession in the last few years, the impact of IT within the country is uneven. Despite relatively sluggish growth
of the domestic market and low levels of ICT usage and penetration in the past, today there are very encouraging
signs of accelerating recourse to ICTs in most sectors of the economy and society.
The major IT hubs like Bangalore, Chennai, Hyderabad, Mumbai, Pune and NCR which account for nearly 90% of
the total Industry in India are near saturated and face infrastructural challenges and human resource constraints
for further expansion. This necessitates the absolute imperative for Indian IT and ITES Industry to diversify into
Tier II and Tier III cities. Emerging technologies such as Mobile Technology, Localization, Virtualization, and
Cloud Computing provide Indian IT/ITES and ESDM industry a major opportunity to become partners in value
creation and drive transformation domestically.
The National Policy on IT 2012 focuses on application of technology-enabled approaches to overcome monumental
developmental challenges in education, health, skill development, financial inclusion, employment generation,
governance etc. to greatly enhance efficiency across the board in the economy. The policy seeks to achieve the
twin goals of bringing the full power of ICT within the reach of the whole of India and harnessing the capability
and human resources of the whole of India to enable India to emerge as the Global Hub and Destination for IT
and ITES Services by 2020.
Vision
To strengthen and enhance India’s position as the Global IT hub and to use IT as an engine for rapid, inclusive
and sustainable growth in the national economy.
Mission
• To consolidate India’s position as the global IT & ITES hub and leverage IT to contribute significantly to GDP
and employment.
• To create a sustainable ecosystem for R&D and Innovation to emerge as a global leader in the conception,
design and development of new products, services, processes and business models.
• To leverage ICT for enhanced competitiveness and productivity of key economic and strategic sectors.
• To provide ubiquitous affordable access to information and public services for enhancing efficiency,
transparency, accountability and reliability.
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• To be the leading resource base for IT and ITES manpower for domestic and global markets.
• To ensure a secure cyber space to facilitate trust and enable sustained growth of ICT.
• To transform India into a Knowledge and Service Society.
Objectives
(a) To increase revenues of IT and ITES Industry from 88 Billion USD at present to 300 Billion USD by 2020
and expand exports from 59 Billion USD at present to 200 Billion USD by 2020.
(b) To gain significant global market share in Cloud Based technologies and Services and Mobile based Value
added services.
(c) To promote innovation and R&D in cutting edge technologies and development of applications and
solutions in areas like localization, location based services, mobile value added services, Cloud Computing,
Social Media and Utility models.
(d) To encourage adoption of ICTs in key economic and strategic sectors to improve their competitiveness and
productivity.
(e) To provide fiscal benefits to SMEs and Start-ups in the key industrial sectors for adoption of IT in value
creation.
(f) To create a pool of 10 million additional skilled manpower in ICT.
(g) To make at least one individual in every household e-literate.
(h) To provide for mandatory delivery of and affordable access to all public services in electronic mode.
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National Telecom Policy -2012
Preamble
Telecommunication has emerged as a key driver of economic and social development in an increasingly knowledge
intensive global scenario, in which India needs to play a leadership role. In the last decade Indian telecom sector
contributed to the all round fast paced growth of not only knowledge and service sectors, but also of other social
sectors. This has also resulted in the development of new business ecosystems. The contribution of the telecom
sector to overall GDP grew from 1.5% to 3% during the decade. It has become the third largest sector in attracting
FDI inflows, accounting for more than 8% of cumulative FDI inflows during the period. Against this backdrop,
Government recognises the need to formulate a new telecom policy to bridge the gaps and face the challenges for
becoming a world leader.
National Telecom Policy-2012 is designed to ensure that India plays this role effectively and transforms the socioeconomic scenario. It endeavours to create an investor friendly environment for attracting additional investments
in the sector apart from generating manifold employment opportunities in various segments of the sector.
NTP-2012 provides the enabling framework for enhancing India’s competitiveness in all spheres of the economy.
It envisages support to platform neutral services in e-governance and m-governance in key social sectors such
as health, education and agriculture that are at present limited to a few organizations in isolated pockets. It is
now imperative to move towards convergence between telecom, broadcast and IT services, networks, platforms,
technologies and overcome the existing segregation of licensing, registration and regulatory mechanisms in
these areas to enhance affordability, increase access, delivery of multiple services and reduce cost.
A concerted effort to boost manufacturing activity is now exigent as robust economic growth in the country is
leading to an extraordinarily high demand for electronic products in general and telecom products in particular.
NTP-2012 provides a roadmap for India to become a leader in cutting edge, state of the art technologies through
R&D and creation and incorporation of Indian IPRs in global standards. This will require measures for boosting
entrepreneurship and creating a major global manufacturing hub for telecommunication equipment to achieve
self-sufficiency.
NTP-2012 recognizes that it has become imperative to put in place an integrated skill development strategy for the
converged ICT sector as a whole so that there is continuous up-gradation of skills in tune with the technological
developments.
Vision
To provide to the people of India, secure, reliable, affordable and high quality converged telecommunication
services anytime, anywhere.
Mission
• To develop a robust, secure state-of-the-art telecommunication network providing seamless coverage with
special focus on rural and remote areas and bridging digital divide.
• To create knowledge based society through proliferation of broad band facilities in every part of the
country.
• Make India a global hub for telecom equipment manufacturing and provisioning of converged communication
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services.
• To promote Research and Development and Product Developments in cutting edge ICTE technologies and
services for meeting the domestic security needs and worldwide market.
• To promote development of new standards and generation of IPRs to make India a leading nation in the area
of telecom standardization, especially among Asia Pacific countries.
Objectives
The NTP-2012 has many objectives. Some are highlighted below:
(a) Provide high quality, affordable and secure telecommunication services to all citizens.
(b) Increase in rural tele-density from the current level of around 35 to 60 by the year 2017 and 100 by the year
2020. Provide affordable and reliable broadband on demand by the year 2015 and to achieve 175 million
broadband connections by the year 2017 and 600 million by the year 2020.
(c) Enable citizens to participate in and contribute to e-governance in key sectors like health, education, banking
etc. to ensure equitable and inclusive growth. Provide high speed and high quality broadband access to all
village panchayats through optical fibre by the year 2014 and progressively to all villages and habitations.
(d) Promote indigenous R&D, innovation and manufacturing that serve domestic and foreign markets by
addressing market distortions, enhancing market accessibility, making available factors of production,
increasing skills and competency in telecom and providing incentives wherever necessary.
(e) Promote the domestic production of telecommunication equipment to meet 80% Indian telecom sector
demand through domestic manufacturing with a value addition of 65% by the year 2020. Provide preferential
market access for domestically manufactured telecommunication products, consistent with international
commitments.
(f) To reposition the mobile phone from a mere communication device to an instrument of empowerment that
combines communication with proof of identity, fully secure financial and other transaction capability,
multi-lingual services and a whole range of other capabilities.
(g) Recognize telecom as Infrastructure Sector to realize true potential of ICT for development.
(h) Strengthen the institutional framework to enhance the pace of human capital formation and capacity
building by assessing and addressing educational and training needs of the sector.
(i) Evolve a framework for financing the sector and streamlining taxes and levies for long term sustainability
of telecom sector.
(j) Facilitate access to the financial resources on favourable terms and fiscal incentives required by indigenous
manufacturers of telecom products and R&D institutions.
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Appendix IV
Proceedings of the Open Houses
Bengaluru
Proceedings of the 1st Open House of STP/EHTP units with the Members of the IMSC Sub-Group
held on 30th November, 2012 at Bengaluru for Review of STP and EHTP Schemes
The 1st Open House for Review of STP and EHTP Schemes was held on 30th of November 2012 at Bengaluru where
the members of IMSC Sub-Group, Dr. Omkar Rai, DG, STPI, Dr. L.B. Singhal, Addl. DGFT, Shri Manoj Kumar Arora,
Addl. DGEP were present. Shri I.S.N Prasad, Principal Secretary, Department of IT & BT, Govt. of Karnataka was
kind enough to share the dais with member of the Sub-Group. More than hundred senior level members of STP/
EHTP units participated in the interaction. The details list of participants from Industry is given as annexure.
1. Initiating the proceedings, Dr. Sanjay Tyagi, Addl. Director, STPI- Bengaluru introduced the Sub-Group
Members and welcomed them to the Open House.
2. Shri J. Parthasarathy, Director, STPI-Bangalore in his address lauded the performance of the IT Industry
from Karnataka State which is contributing more than 30% of total IT exports from the country. He stated
that earlier 90% of IT exports were made through STP Scheme only and the recent initiatives for review
of STP/EHTP scheme would fillip the growth of IT exports from STP scheme which was declined due to
reason like withdrawal of IT benefits etc.
3. Shri P.K. Das, Director, STPI-Guwahati &Bhubaneswar briefed the audience about the background of the
constitution of the Sub-Group and it’s mandate as well as the reason for conducting the Open House.
He also described the entire exercise being carried out by the Sub-Group like studying of international
scenario, obtaining of suggestions from STP/EHTP units and other stakeholders through questionnaire,
emails and discussions etc. He further stated that the Sub-Group members in their effort to have better
understanding of the industry requirements beyond their responses to questionnaire etc. wanted to have
a direct interaction with Industry and therefore are present in the Open House at Bangalore.
4. Dr. Omkar Rai, Director General, STPI in his brief remarks emphasized on out-of- box suggestions from
IT Industry to enable revolutionary changes in the Policy and bring it to the present context. He also
revealed about some of the recent initiatives of Department of Electronics & IT, Govt. of India and STPI
regarding proposed incentive scheme for dispersal of IT Industries to Tier II/Tire III cities, incentivizing
the MSME units as well as strengthening the Incubation for development of products & IPR. He briefed
about the recently announced National Policy on Electronics & IT which is very ambitious and hopeful
that these recent initiatives by DeitY & STPI would foster the growth of IT/ITES and ESDM exports.
5. Dr. L.B Singhal, briefing the audience recalled the visionary approach of Software Policy announced
during 1986 and therefore requested Industry to give their feedback not only confining to FTP & HBoP
but also with a vision for next 10 years. He also stated the objective of the Sub-Group
6. Shri Manoj Kumar Arora, Addl. DGEP acknowledged the important role played by the IT Industry in terms
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of earning Foreign Exchanges and generating employment. In his remark he requested for innovative
and out of box suggestions which would be helpful for the Sub-Group to recommend for formulation of
suitable policy.
7. The representatives of IT Industries were invited to place their suggestions one by one. The representative
of Accenture requested the Sub-Group members for specific policy guidelines for Disaster Recovery
Services and Business Continuity Services since the Foreign Customers are not signing the contracts
without these provisions. He drew the attention of the Sub-Group for a clear cut guidelines and clarity
on DR services for multiple units. He further requested for permitting the employees to work from home,
which is very prevalent in USA and catching up in Europe, Australia and some Asian countries. In his
view this would also help to cut the infrastructure cost and optimum utilization of resources which is a
challenge faced by the Industry now a days. He also raised the issue of depreciation of other IT items like
Switches, Server & Router etc. and requested to bring those items under the same norms of depreciation
at par with Computers & Laptops.
Responding to him, DG, STPI revealed that the provision of working from home is already under the
Policy. However, he suggested for having a clarification to resolve the issue. The Addl. DGFT & Addl. DGEP
stated that the provision is already in FTP and the policy does not bar access through data communication
provided that the bonded goods are not shifted out of STP/bonded premises. ADGEP assured that he will
look in to for a clarification in this regard. ADGFT advised the Industry representative to send a write up
regarding his proposal for deprecation norms.
8. The Representative from Broadcom acknowledged the role of STP Scheme which is instrumental for
their growth. He raised the issue of 10 A benefits and stated that the Service Tax reimbursement is very
litigative and the provision does not get translated to ground level. In his suggestion, he requested for
making provision of exemption instead of reimbursement. Responding to that DG, STPI stated that the
incentive policy of Govt. is moving towards direction of reimbursements instead of exemptions. He cited
the example of CST reimbursement is being carried out by STPI and stated that STPI is looking for similar
kind of provision for Service Tax also for STP units.
9. The representative of Infosys welcomed the initiatives for revamping the STP scheme and emphasized
on suitable policy formulation for bridging the gap between talent produced and Industry demand by
involving Industry, University and Academia and Financial Institution. DG, STPI enlightened that in 12th
Financial Year Plan lots of activities are being planned in this direction. He also revealed that setting up
of ICT Academy is an initiative by the Govt. for imparting training of teachers and professionals to bridge
the gap. ADGEP suggested that IT major like Infosys should come up with innovative proposal which are
relevant in the changing scenario.
10. The representative of APC drew the attention of the Sub-Group members on following issues.
• Difficulties in De-bonding/Re-export of items procured through Self certification basis as per Para
6.2 (b) of FTP.
• Problem in disposal of obsolete goods of Indigenous goods.
• Problem in bringing back of defective items for repair and returnable basis which are exported &
sold indigenously
• Disposal of old/obsolete goods procured domestically in DTA.
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• Currently there is no provision for Storage of finished goods in Pvt. Bonded Warehouse which is
objected by the Customs.
• There is no provision of supplying components in DTA like present provision of 5% for exports of
components for service.
• Raising the limit for export of sample for finished goods
11.DG, STPI and other members noted the above issues and advised that the specific suggestion on the
above and other issues should be forwarded to them for taking appropriate action.
12.The representative of BOSCH requested the Sub-Group members for making provision for permitting
import of Car which is being used for R & D and simulation purposes. The BOSCH representative also
raised the issue of import of consumables and difficulties faced by them which is also raised by WIPRO.
13. The representative of Intel wanted to know any changes in Policy in the wake of implementation of GST
and requested for Hand Carry Policy like other countries. The ADGEP clarified there is no effect on Import
guidelines for GST and stated that the Hand Carry Provision may not be feasible at present.
14. The representative of WIPRO suggested for making provision of centralized STP registration for various
units across the country and clubbing of exports for NFE purposes through cross subsidization to attract
IT Industries in Tier-II/Tier-III Cities. ADGFT responded that since the provision is of meeting NFE within
5 years from date of operation, different locations starting operation at different times may not allow
clubbing of NFE. However, the members welcomed suggestion from Industry regarding any concept of
computation of clubbed NFE for consideration of the same.
15. The representative of Intel wanted to know any changes in Policy in the wake of implementation of GST
and requested for Hand Carry Policy like other countries. The ADGEP clarified there won’t be any effect
on Import guidelines for GST and stated that the Hand Carry Provision is not feasible at present.
16.The Representative from Alcatel Lucent requested for e-Waste provision and depreciation guidelines of
the same. He also drew attention regarding delay in clearance of certain equipments for WPC issue which
was addressed by ADGEP & Director, STPI-Bangalore.
17. The Representative of Tech Mahindra requested for exemption of local taxes for STP units and possibility
of extending 10 A benefits for incremental exports.
18. The Representative of Goldman Sachs suggested for making provision of Incentives for Investment, free
transfer of CG among the group companies/units and requested the Sub-Group members to bring down
the current depreciation period. ADGFT suggested that an analogous list of items similar to computer &
peripherals may be sent to them for consideration of bringing down the depreciation period.
19.The representative of TCS requested for permitting 100% depreciation of UPS & Battery within 3 years
since the life period of Battery expires by that time and it is difficult for storage of hazardous materials
for 10 years. The members suggested for a complete list of items for which the Industry propose to relax
the duration for depreciation.
20. The representative of Mercedes Benz requested for permitting more items for import under STP Scheme
and suggested that it would be rather beneficial for Industry having a negative list of import. She drew
attention regarding difficulties in import of second hand CG for want of environmental clearance and
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raised the issue of permitting import of CG for training purposes which is currently not permitted. She
also requested for reducing the depreciation norms for computer & peripherals from 5 years to 3 years in
line with Company Law and permitting import of vehicles for R & D purposes. ADGFT clarified that as per
the Para 2.3.2 of FTP there is a Policy relaxation committee which considers any application regarding
policy relaxation for R & D purposes. DG, STPI advised any such case seeking policy clarification by the
STP unit must be routed through STPI/IMSC.
21. The representative of Philips requested for bringing the product development activities under STP Scheme
without difference licenses.
22.The Representative of RBS raised issue of sharing of network links among the group companies and
possibility of leasing the asset among group companies/STP units in case of idle capacity.
23. The representative of Oracle requested for a clarification for sharing of non bonded networking equipments
among group companies. He also raised the issue of requirement of letter from supplier for de-bonding
of imported goods.
24. The representative of SAP Labs requested for reducing depreciation norms for Laptops/Computers/Tablets
within 3 years.
25. The representative of VXL Instruments suggested for permitting supply of spares in DTA and reducing the
depreciation norms.
26.The representative of Aerospace requested for provision of incentivizing for export of Aerospace
Engineering and also suggested to amend the Para 6.17 (C) of FTP to include “And/ Or” for return/
replacement/destroy of defective goods.
27.One of Industry representative raised the issue of Customs Circular 74/2001 and interpretation
by the Customs insisting on declaration by supplier for not availing the deemed export benefits for
debonding.
28. The representative of Cognizant appreciated recent provision of simplification and online submission of
Softex and congratulated DG STPI for taking these initiatives with RBI. DG STPI revealed that the process
of automation/computerization of entire STP process is underway which is applauded by the Industry. The
Industry representative also emphasized on provision of Tax incentives for Research, Patent & Training
as well as expansion purposes in line with countries like Philippines & Malaysia. She also requested for
clear policy provision for running DR/BCP services and inclusion cloud computing under STP Scheme for
Tier-II/Tier-III operation.
29. The representative of Talima Salem wanted to know about the competent authority for granting the Star
Status for EHTP units.
30. The representative of TNK Chennai raised the issue of denial of Income Tax exemption for them under
section 10B. DG STPI clarified that the assessing authority should assess under relevant law and STPI
has already taken up the matter with revenue department and also taking the matter in the next IMSC
meeting
31.The representative of L & T Infotech appreciated STPI-Bangalore for the online system of Softex and
various reports. He requested for making online provision of Import approvals with digital signature.
DG STPI revealed that STPI is in process of automating the entire process of STPI for which the RFP is
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ready. Once the computerization is over there will be uniformity of all records, permission etc. across the
center.
32. The representative of Satyam Electronics requested for permitting DTA of any goods & service instead of
similar goods as specified in FTP. The ADGFT clarified that the same is permitted under Para 6.8 (A) of
FTP without concessional duty.
In the concluding remarks Shri ISN Prasad, Principal Secretary, Department of IT & BT, Govt. of Karnataka
appreciated the effort of STPI and other Sr. representatives of Ministry of Commerce & Department of Revenue
for the Open House. He also advised the Industry to let him know about State related issues faced by the IT
Industry in Karnataka. He also suggested for organizing similar kind of Open House if required to resolve
the State related issues.
Shri Manoj Kumar Arora, Addl. DGEP in his concluding remark thanked the Industry for valuable inputs. He
requested to send any more suggestions/wish lists so that the Sub-Group could go back to the Govt. to tell
what the Industry wants.
Dr. Omkar Rai, DG, STPI in his concluding remark, stated that inputs in the open house have been different
from the responses to questionnaires and all the inputs will be given due weightage while recommending
review of the STP/EHTP policy so that the problems of the industry can be minimised. He also requested for
more suggestions from Industry for making radical changes in Policy for dispersal of Industry to Tier-II/TierIII cities, strengthening of the SME sector and creating environment for Innovation.
Dr. L.B. Singhal, Addl. DGFT, thanked the Industry for extremely interactive session and he assured to look in
to each and every suggestions made by the Industry.
Concluding the proceeding, Shri P.K. Das, Director, STPI-Guwahati &Bhubaneswar extended Vote of Thanks
expressing gratitude to members of Sub-Group and Principal Secretary, IT& BT for participating in the Open
House in spite of their various pre-occupations. He thanked the Members for patient hearing and clarifying
the queries of the Industry. He also thanked the Industry representative for their overwhelming response and
immense co-operation for making the Open House a great success.
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Jaipur
Proceedings of the 2nd Open House of STP/EHTP units with the Members of the IMSC Sub-Group
held on 21st December, 2012 at Jaipur for Review of STP and EHTP Schemes
The 2nd Open House for Review of STP and EHTP Schemes was held on 21st of December of 2012 at Jaipur where
the members of IMSC Sub-Group, Dr. Omkar Rai, DG, STPI, Dr. L.B. Singhal, Addl. DGFT were present. Shri Manoj
Kumar Arora, Addl. DGEP could not present at the Open House. Representatives of around 41 STP/IT/ITES and
ESDM units participated in the interaction. The details list of participants from Industry is given in annexure.
1. Initiating the proceedings, Dr. Sanjay Tyagi, Addl. Director, STPI-Bengaluru introduced the Sub-Group Members
and welcomed them to the Open House.
2. Shri CVD Ramprasad, Director, STPI-Noida in his opening address acknowledged the contribution of STP Scheme
and said it is time to review the Scheme after two decades with a direction for next 10 years. He emphasized
on the contribution of SMEs and importance of Tier-II & Tier-III cities in the present context. He expressed his
satisfaction over the vibrant IT sector and pleasant experience in Jaipur. He acknowledged his deep gratitude for
the support of State Govt. for the promotion of IT sector in the State of Rajasthan.
3. Dr. Sanjay Tyagi, Addl. Director, STPI-Bengaluru briefed the audience about the background of the constitution
of the Sub-Group and its mandate. He also described the entire exercise being carried out like inviting suggestions
from STP units and other stakeholders through questionnaire and requesting Industry response through mail and
website etc. He stated that in a view to have a direct interaction with Industry Open Houses are being organized
at strategic locations of the country and the Open House at Jaipur is second of its kind after Bangalore held on
30th Nov 2012.
4. IMSC Sub-Group Member Dr. L.B Singhal, ADGFT briefed about the total exports of goods and services made
from the country and stated that STP Scheme has been a major contributor to this. He expressed his concern
over the rising import from the country and said that the need of the hour is to bridge the gap of trade deficits
between our Import and Exports in which the role of STPI shall be crucial. He revealed that this is an initiative
to recommend what are the other benefits required by the Industry in view of withdrawal of Income Tax benefits.
He stated about importance of listening the views of Industry for which this Open House is organized to hear the
Industry and take their views forward.
5. Dr. Omkar Rai, Director General, STPI in his remarks enlightened about the many initiatives being taken up by
DeitY and STPI and briefed about the recently announced National Policy on Electronics & IT by the Govt. which
is very ambitious for fostering the growth of IT in the Country. As part of these initiatives, he revealed about the
proposal for Reimbursement of Income Tax to STP units in Tier-II/Tier-III cities, Generation of domestic production
& IT Business, Enhancing the Production efficiency, Strengthening the Incubation for development of products
& IPR, providing angel funding, marketing support, creating brand equity for the Industry. He stated that the
reason for review of STP Scheme is to make it more simple and attractive through interaction with the Industry.
He emphasized on out of box suggestions from IT Industry to make provision of enabling Policy Regime in the
present context.
6. Then, the representatives of IT Industries were invited to place their suggestions one by one. The representative
of Back Office IT Solution drew the attention of the Sub-Group regarding problem faced by them for de-bonding
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of CG. The Addl. DGFT clarified on the process involved in De-bonding. After listening the problems and views of
the Industry, DG STPI opined that the existing de-bonding process needs to be simplified.
7. The representative from Activant Solutions requested for introduction of Income Tax benefits on export slab
basis. He wanted to know regarding mandatory requirement of Customs Bonding if the STP unit does not import
any duty free items. Responding to this, DG, STPI stated that STPI has already issued clarification that Customs
Bonding is not required in case the unit does not avail any duty free benefits. The Addl. DGFT asked for suggestion
from the Industry on one of the proposed provision for introduction of “Soft Bonding”. Dr. Sanjay Tyagi, Addl.
Director, STPI-Bengaluru described the Self Certification & Rewarehousing facility being permitted by the Customs
for STP units at Bangalore. The Industry representative requested for provision of Single Window Mechanism
under STPI instead of being routed through multiple agencies like Customs, Central Excise etc.
8. The Representative from Avinex raised the issue of problems being faced during renewal of Customs Private
Bonded Warehouse License and also drew attention of the Members on issues related to VAT/Sales Tax and DTA
Sales.
9. The representative of Girnar apprised the IMSC Sub-Group members that many units are not availing duty free
benefits due to the problem faced during Custom Bonding. He requested that SME IT units need incentives back
to retain their cost competitiveness in the global market. He appreciated the non- bureaucratic approach of STPI
and suggested for similar approach by the other agencies concerned with STP scheme.
10. The representative of Siya Infotech drew the attention of the Sub-Group regarding problems and lengthy
Customs procedure during de-bonding of CG. He requested for making provision of small size plots by RIICO since
the existing arrangement is not affordable for SME/tiny units. The Industry representative requested for Work
from Home Permission. DG, STPI and Addl. DGFT wanted to know that since the provision is already there in FTP
what specific permission required by the Industry. The representative from Equilibrise suggested that permission
should be given for sending/transmitting program/codes/services online by the authorized employee directly from
the home to the customer.
11. Addl. DGFT wanted suitable suggestions from the Industry in the wake of introduction of Direct Tax Code
(DTC) which envisaged on Investment linked exemptions instead of Profit Linked Incentives. The representatives
from the Industry opined that unlike other conventional Industry, the IT Units have very limited investment on
Plant & Machinery (without Land) hence the Investment linked approach may not be much beneficial for IT and
SME units.
12. The representative of Mindspace suggested that since the IT Industry is human centric, the provision of IT
exemption should be made on no. of resource created/manpower based instead of investment linked. He also
requested that the proposed provision should cover for creation of built up capacity. Addl. DGFT advised for
sending a complete proposal on this for inclusion in DTC.
13. The Industry representative drew attention regarding problems for SMEs in SEZ in terms of high expenses,
difficulties in getting small space, distance from the city and high commuting time. He suggested for earmarking
similar exports zone for STP units.
14. One of the Industry representatives suggested for simplifying the procedure by removing the hurdles to make
India an IT Superpower. He suggested that provision should be there so that one can start an IT company from
home without any location constraints. He also suggested that the provision of IT exemption in DTC should be
on Capital/Manpower and Resource based. DG, STPI clarified that setting up of a STP unit is very simple as such
there is no location and size restriction applicable for STP unit.
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15. The representative from WeCode4U requested for re-introduction of Income Tax exemptions since the IT
Industry badly hit by the recession worldwide. He suggested that particularly SME needs support at this moment.
Addressing this issue, DG, STPI briefed the participants regarding various initiatives taken by STPI & DeitY. He
reveled that STPI has engaged Deloitte for suggesting suitable provision for formulation of reimbursement scheme
for SME/MSME and other IT Units in Tier-II/Tier-III cities. He also briefed regarding other proposed schemes like
Incubation, Marketing Support for STP units.
16. The Industry representative requested for reimbursement of Income Tax (TDS) paid by their employees and
IT professionals.
17. The representative from Rising Sun Tech suggested for procedural simplification and making provision of
Monthly/Quarterly submission online. DG, STPI briefed the Industry regarding the entire automation process of
STPI which is in very advanced stage.
18. One of the Industry representatives suggested that the Corporate Tax should be reduced to 10%.
19. The representative from Dream Team requested for subsidizing the Electricity, Internet and rental charges in
STPI Incubation facility. DG, STPI revealed that to meet the Incubation demand and facilitate the Industry, STPI
has plan to create around 10 lakh Sq.ft of Incubation space in twelve locations of the country. He assured the
Industry that while deciding the tariff/charges STPI shall look in to options like Rental model/per Seat model/Per
Sq.ft model.
20. The representative from Industry requested to abolish the State Entry Tax for IT units and exemption from
other State taxes and levies.
21. The representative from IBM India raised the issue of Customs circular No. 74/2001-Cus which necessitates
production of a certificate to the effect that the deemed export benefits availed of against such goods at the time
of their procurement have been paid back during de-bonding/DTA clearance of indigenous goods by STP units.
He requested that certificate for paying back benefits condition may be removed since it is not possible for the
Industry to obtain the certificate from the Original Supplier after 10 years. He also suggested introducing the
Self declaration mechanism for import of goods and requested that the existing provision for requirement of both
Import & Procurement certificate may be done away with. The IT units may be permitted to furnish only Import
Certificate from STPI at the time of Re-warehousing.
22. One of the representatives from Industry raised the issue of compulsory scrutiny of Income Tax authority.
23. The representative of Equilibrise expressed his concern over declining share of the country in Outsourcing
globally. He suggested taking IT Industry to Tier-II/Tier-III cities, Incentivizing the IT Units operating from Tier-II/
Tier-III cities and to make provision of attractive Incentives and offer more facilities than Tier-I cities to make the
country a global outsourcing Hub.
24. One of the representatives from Industry suggested that STPI as a moderator/facilitator for IT Industry should
be empowered as Single Window Agency for land and other Infrastructure on behalf of State Govt.
25. The Industry representative from Infosys raised CST reimbursement issue and requested for making provision
of exemptions instead of re-imbursement. He also raised the issue of DTA sales permission and requested for
simplification of Import and DTA process.
26. One of the representatives from Industry raised the issue of mandatory requirement of STPI registration to
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avail Incubation facilities offered by STPI. DG, STPI stated that STPI registration which otherwise is permission
for operating as EoU under STP Scheme is required for availing the benefits/incentives under STP Scheme/FTP.
However, he clarified that since STPI promotes the MSME/SME units/young entrepreneur through its Incubation
program there is no need of having mandatory STPI registration for all Incubatees.
27. One of the representatives from Industry suggested that since the Manpower is main investment for IT
Industry, the part of their salary and wages may be considered as Investment in the proposed Investment linked
Incentives. He also suggested for creating an Information Cell at STPI for all IT related services and facilities.
Dr. L.B. Singhal, Addl. DGFT, in his concluding address expressed his satisfaction for extremely interactive session
and assured to look in to each and every suggestions made by the Industry. He also requested the Industry to
keep him inform on their day today problems if any, Policy issues and Indirect Tax issues like Import & CST for
resolving the same.
Dr. Omkar Rai, DG, STPI in his concluding remark, stated that the objective of this Open House is to listen to the
Industry and change the STP policy so that they won’t face any problem. He was hopeful that the interaction
and suggestions from the Industry will immensely contribute to address the issues like Procedural, Policy and
Operational as well as Issues for future.
Concluding the proceeding, Shri Devesh Tyagi, Director, STPI-HQ extended Vote of Thanks expressing his gratitude
to DG, STPI and Addl. DGFT for participating in the Open House in spite of their busy engagements. He thanked
the Members for patient hearing and addressing the concerns of the Industry. He also thanked the Industry
representatives for their overwhelming response and immense co-operation.
79
Pune
Proceedings of the 3rd Open House of STP/EHTP units with the Members of the IMSC Sub-Group
held on 15th January, 2013 at Pune for Review of STP and EHTP Schemes
The 3rd Open House for Review of STP and EHTP Schemes was held on 15th of January 2013 at Pune where the
members of IMSC Sub-Group, Dr. Omkar Rai, DG, STPI, Shri Manoj Kumar Arora, Addl. DGEP were present. Dr.
L.B. Singhal, Addl. DGFT could not present in the Open House. Representatives of around 81 STP/IT/ITES and
ESDM units from Pune & Mumbai participated in the interaction.
1. Initiating the proceedings, Dr. Sanjay Tyagi, Addl. Director, STPI-Bengaluru introduced the Sub-Group
Members
2. Shri Ajay Sharma, Director, STPI-Maharashtra made the welcome address.
3. Shri P.K. Das, STPI-Guwahati/Bhubaneswar briefed about the consultative process adopted by the IMSC
Sub-Group.
4. IMSC Sub-Group Member Shri M.K. Arora, Addl. DGEP in his opening remark stated that IT has been
considered as a priority sector for Govt. due to its immense contribution for social up-liftments. He said
the Govt. stands committed to modify the STP/EHTP Scheme to make it more attractive and multiplier in
years to come. He requested for innovative suggestions mainly on following four fronts for a valuable
and prospective discussion and take the views forward.
(a)
Fiscal and Non-Fiscal Issues
(b)
Policy and Procedural Matter
(c)Technology
(d) Any other out of box suggestions with a futuristic approach to double the GDP and
employment.
5. Dr. Omkar Rai, Director General, STPI in his opening remark stated that IT/ITES and ESDM Industries
are at cross road to double the exports, employment and revenue. He enlightened about the many
initiatives being taken up by DeitY and STPI and briefed about the recently announced National Policy
on Electronics & IT by the Govt. which is very ambitious for fostering the growth of IT with a vision for
next 20 years. As part of these initiatives, he revealed about the proposal for Reimbursement of Income
Tax to STP units in Tier-II/Tier-III cities, Generation of domestic production & IT Business, Enhancing the
Production efficiency in IT, manufacturing and other sectors, Boosting the production and utilization of
indigenous products, Strengthening the Incubation for development of products & IPR, providing angel
funding, marketing support, creating brand equity for the Industry.
He also enlightened the participants about Automation Process of STPI activities which is likely to be
rolled out within a year to ease the approval and disposal mechanism. He stated that STPI handles about
10 lakh transactions per year and specific timeframe is set for disposal of various applications.
He said that one of the initiatives to review and simplify the STP/EHTP Scheme is to make it more attractive
and smooth for the exporters. Catching the aspiration, he requested for path breaking and revolutionary
80
thoughts from the Industry keeping in mind growth and making the country IT super power with wealth
creation and product developments, which can lead the country to different paradigm.
Then, the representatives of IT Industries were invited to place their suggestions one by one.
6. The representative from Cummins Research & Technology India, Pune requested the IMSC Sub-Group
members that emphasis should be given on R&D, Innovation and Product Development. He suggested
extending NFE period for R&D activities in IT and formulating right policy for creating an eco-system
for technology and enterprises to resolve barrier and taking marketable products. He also suggested
for giving priority in advance manufacturing facilities and requested for corresponding policy in this
regard. He said since 30 to 40% women work from home to balance between work and life, work from
home permission should be granted in IT sector. Responding to this DG, STPI said the work from home
is explicitly permissible as per the current policy. However, the specific provision in FTP is expected very
soon.
7. The representative from Kopera Software suggested for thrust on policy in Research, Innovation, New
product development, Back end research.
He suggested for writing off duty liability & penalty for
duty free goods in the event of failure of New product development and R & D and Innovation projects
undertaken by STP/EHTP units keeping in view of risk involvements of these assignments as well as
boosting Innovation, IPR, Product Development in the country. The IMSC Sub-Group members suggested
for a specific suggestion and implementable frame-work for consideration.
8. The representative from Morgan Stanley requested for defining the IT & ITES services for clear
interpretation to avoid the ambiguity. He also suggested for making specific provision in the STP scheme
to use the Custom bonded area for Business Continuity Plan (BCP) with detailed operational guidelines.
He suggested for defining Life of Assets of all goods permitted for importing and procuring duty free
and making provision of automatic removal/clear from Customs Bond after finishing the life cycle of the
goods doing away with de-bonding permission for each item. He also requested for making provision
of blanket approval for sub-contracting like DTA. Shri M.K. Arora, Additional DGEP, suggested that the
units should come with useful life of different category of assets and forward to the IMSC Sub-Group
members for consideration
9. The Representatives from Colex acknowledged the responsive services provided by STPI and suggested
for revival of Income Tax incentives, minimizing dependency on Customs. He also suggested the capital
and bonded items of the STP units can be shared by other STP units and DTA for optimum utilization of
the facility to be cost competitive in global market since escalating price is a challenge for Indian IT &
ITES companies.
10. The representative from W.N.S. Global requested for reinstating of the Income tax benefit fully or partially,
outright exemption from VAT, Octroi and other state levies for IT & ITES unit. He suggested that a
single window clearance mechanism should be in place for all exemptions and all other items required
for training should be allowed duty free. He also emphasized on skill development programme and
suggested that the life span of assets for the purpose of Customs depreciation should be three years due
to fast technological obsoletation.
11. The representative from Surya Solution requested for introduction of soft bonding and self certification
mechanism for duty free import and procurement by the IT units.
81
12. The representative from Zensar Technology suggested on following points :
• Continuation of Income Tax exemption for dispersal of IT industry in tier II and tier III cities
• Reducing the threshold limit for bulk softex certification
• Depreciation for computer and computer peripherals should be three years and other items
should be for five years.
• The Networking equipments, dialer should be treated as IT products
• Process of procedural aspects of CST re-imbursement should be simplified
He also raised apprehension that the countries like Philippines, Ireland, Vietnam are aggressively
developing IT & ITES Sector and by 2020 Philippines may cross our IT export figure. Hence, Govt. of India
should frame right policy at this juncture to be leader in IT export in the next decade.
13.The representative from Renu Electronics which is one of the first EHTP unit under STPI-Pune raised
the practical and operational difficulties and suggested for simplification of procedures for continual
permission of import/export of components and spares to facilitate prompt after Sales Service. He
requested for policy modification and Simplifying the procedure and introduction of fast track clearance
for import and re-export of goods for Warranty repair possibly within one day.
He also suggested for simplification for policy and process for sub-contracting, partner collaboration,
outsourcing of processes and permission for import of components and re-export of rejected component.
14.The representative from Persistent System which is among one of the first STP unit appreciated the
contribution of STP scheme for last 22 years and suggested that the exemplary scheme should continue
further for proliferation of small companies. He suggested that Govt. incentives should be applicable on
results than inputs. He also emphasized on Govt. buying of IT and IT related products and suggested
that incentive should be provided for using indigenous products, services from SMEs. He also suggested
for incentives for acquisition of small IT units by bigger companies to boost innovation and stress on
research and PHD level and creating an eco system between academia and IT industry in high end
research, innovation with a collaborative approach.
He suggested for cross integration with other segments in research and encouraging small companies
to go to small cities to reduce the cost. DG, STPI clarified that the Sub-Group considers for preferential
market access for indigenous products and prioritizing the indigenous software and services. Adll DGEP
opined that the Govt. procurement for e-Governance activity may be incentivized.
15.The representative from Milletech Computers suggested bridging between STP and EHTP scheme for
embedded product and innovation for bringing flexibility of STP units to do both software and hardware
activities under single scheme. He also suggested Govt. should give special focus on EHTP industry
which is having a multi trillion dollar market to reduce dependency on software and services market
which is globally shrinking.
16.The representative from Emersion requested for allowing development of prototype for product
development and allowing the products for testing and R&D purposes outside their premises.
17. The representative from KPMG drew attention of IMSC Sub-Group members and suggested on following
82
points :
• To give emphasis on cost cutting to reduce the cash flow issues
• Defining all input/outside services consumed by STP/EHTP units under the bracket of Service Tax
reimbursement/exemption to remove difficulties in proving the nexus of service with operation.
• Simplification of CST re-imbursement
• Export packing credit
• Allowing using common facilities between STP units to optimize resource and reducing cost
• Allowing consolidation of two or more STP units operating across the countries
• Permitting de-bonding of components
• Defining life of the products and no permission should be required for de-bonding for end of life
products and need of dispersal of Industries in Tier II and Tier III cities.
18. The representative from KPIT Cummins Infosystems appreciated STPI for excellent support and suggested
for system integration of both hardware and software for facilitating product development. He requested
for making provision for consolidation of multiple STP units and simplification of exit norms from STP
scheme.
19.The representative from Jabil circuit suggested for allowing import of raw materials and re-export of
goods and re-imbursement from Octroi, VAT and other state levies to improve the cash flow of EHTP
units which are facing low margin. He also requested for fast track Custom clearance and facilitating
easy import for warranty repairs. He cited example of Brazil which is fast emerging as a manufacturing
hub.
20. The representative from IBS suggested for exemption of all direct/indirect taxes instead of re-imbursement
to improve the cash flow. He suggested for simplifying of renewal process and making part of tax
adjustment of indirect taxes for transfer pricing.
21. The representative from Jabil raised the issues of anomalies in Policy for undertaking DTA sales by EHTP
units in comparison to the duty free Import provision from the countries like Thailand, Srilanka and
other Asian countries having Free Trade Agreement with India (FTAI). He requested for putting FTA items
at zero duty for supplying in DTA by STP/EHTP units to allow level playing field with FTAI countries and
boost the domestic productions.
The Addl. DGEP clarified that it may be difficult for EHTP units to go for DTA sales on paying duty as the
same items may be cheaper for import from FTAI countries.
The representative from Innova Point Infotech wanted to know the target date for review and reviving
of STP scheme and suggested that incentives should be offered for retaining the manpower and low
attrition rate.
22. The representative from KPMG again raised the FTA issue and raised apprehension that the implementation
of FTA will facilitate more exit from EHTP scheme. He suggested for zero duty for all FTA items for
clearance in DTA.
23.The representative from Ansys Software thanked the STP scheme for bringing a boom in IT export and
83
raised the issue and difficulties of inspection by Factory Inspector, Labour Department and suggested
that a co-ordination mechanism should be evolved to get rid of such difficulties faced by the IT units.
DG, STPI suggested that the issues may be taken up with the State Govt.
24.The representative from Cummins suggested that transfer of services from different units of one group
of company should be permitted with a mark-up price and requested that such transfer should not be
counted as DTA sales.
25.The representative from Nomura Services suggested for exploring possibility of offering Time Zone
incentives to reduce the overhead burdens for three shift operations and boost the productivity.
26. The representative from Amdocs suggested for a speedy redress mechanism to resolve the disputes with
Customs and Income Tax. He requested for specific guidelines on Transfer Pricing.
27. The representative from Infosys suggested on following :
• Allowing consolidation of different units of same company
• Defining life of assets of all goods permitted under STP and EHTP units
• Exemptions of CST like SEZ
• Appending the list of all items in CST registration uniformly which is required for availing CST
re-imbursement.
• Clear procedure for re-imbursement of fuel duty as the units are facing difficulties to get reimbursement
• Allowing sub-contracting of services
• Doing away with bank guarantee condition for the units which are served show cause by any
agency.
28. The representative from Samudra Electronics raised the issue of difficulties in Customs bonding procedure
and requested for provision of single window clearance mechanism at STPI for import and all Customs
related activities.
29.The representative from Emersion Innovation requested the restriction of DTA sales should be removed
and permitting Bond to Bond Transfer among STP units of same entity or different companies.
30.The representative from TCS suggested that domestic projects executed for Defense agencies should be
incentivized keeping in view of the security angles involved.
31. The representative from Xoriant Solutions, Mumbai raised the issue of problem faced by the IT units for
Inter unit transfer of capital goods and service taxes. He suggested for defining all input/outside services
consumed by STP/EHTP units under the bracket of Service Tax re-imbursement/exemption to remove
difficulties in proving the nexus of service with operation. He also raised the issue of lodging F.I.R for
any missing assets for the purpose of de-bonding. Addl. DGEP clarified that instead of lodging F.I.R,
reporting of missing item at concerned police station suffices the requirement for de-bonding.
32.The representative from Engima Software raised the issue of payment receipt through credit card from
84
foreign clients and suggested that necessary provision should be made for remittance through Credit
Card. Addl. DGEP clarified that the matter may be taken up with DGFT/RBI for enabling credit card
payments towards Foreign Exchange remittance.
33.The representative from Persistent again requested for simplification of DTA sales procedure and
enhancement of limit. He suggested that blanket permission should be given on the basis of CA certificate.
He also requested for a single bond for all inter-unit transfer and exemption from CST and Service Taxes
like SEZ and automatic de-bonding of IT and non IT products after end of life subject to positive NFE,
allowing re-export of goods on self declaration basis. He raised the issue of IT Policy of State Govt. which
is formulated in 2009 but the GR for provisions like Stamp Duty exemption was released in 2012. He
suggested that a Committee should be formed at each STPI to co-ordinate with all State and Central Govt.
issues.
34. The representative from Aloha Technology complemented STPI for excellent support and raised the issue
of monthly submission of Softex. He requested for enabling provision by STPI and RBI for delayed
submission
In concluding address Dr. Rajeev Arora, JDGFT, Pune who was participating as an invitee, congratulated
STPI for conducting such type of programme to ease the operational difficulties faced by the IT units. He
narrated the initiatives taken up at DGFT office at Pune for fine tuning of services and fast track clearance
mechanism.
Shri M.K. Arora, Addl. DGEP in his concluding address extended his thanks for all valuable suggestions
from the industry. Summarizing the proceedings of the Open House he assured that the Sub-Group will
seriously look into the demands/suggestions like defining of life of assets of de-bonding , issues of credit
card payment, provision of single application form for LOP and Customs bonding , exploring possibility of
provision for single window for Customs related permission/approval etc.
Dr. Omkar Rai, DG, STPI in his concluding address thanked the participants for valuable inputs and requested
to send any other suggestion through mail. He assured to come up with an innovative and simplified scheme
to make the life of the exporters easier, simpler and better.
In this occasion the DG, STPI felicitated Shri Anand Deshpande, Founder & Managing Director of the Persistent
which is the first STP unit under STPI-Pune, acknowledging the association with STPI.
Concluding the proceeding, Shri Devesh Tyagi, Director, STPI-HQ extended Vote of Thanks.
85
Bhubaneswar
Proceedings of the 4th Open House of STP/EHTP units with the Members of the IMSC Sub-Group
held on 24th January, 2013 at Pune for Review of STP and EHTP Schemes
The 4th Open House for Review of STP and EHTP Schemes was held on 24th of January 2013 at Bhubaneswar
where the members of IMSC Sub-Group, Dr. Omkar Rai, DG, STPI, Shri Manoj Kumar Arora, Addl. DGEP were
present. Dr. L.B. Singhal, Addl. DGFT could not be present in the Open House. Shri M.S. Padhi, Commissionercum-Secretary, Department of IT, Govt. of Odisha graced the Open House as Special Invitee. Representatives of
around 66 STP/IT/ITES and ESDMunits from Bhubaneswar, Rourkela, Berhampur, Bhadrak and other parts of the
State were participated in the interaction.
1. Initiating the proceedings, Dr. Sanjay Tyagi, Addl. Director, STPI-Bengaluru introduced the Sub-Group
Members
2. Shri Manas Panda, Addl. Director, STPI-Bhubaneswar made the welcome address.
3. Shri P.K. Das, Director, STPI-Bhubaneswar/Guwahati briefed about the consultative process adopted by
the IMSC Sub-Group.
4. In his opening remark, Shri Manoj Kumar Arora, Addl. DGEP acknowledged the important role played
by the IT Industry in terms of earning Foreign Exchanges and generating employment. He requested
for innovative and out of box suggestions which would be helpful for the Sub-Group to recommend for
formulation of suitable policy.
5. Dr. Omkar Rai, Director General, STPI in his opening remarks emphasized on innovative suggestions
from IT Industry to enable revolutionary changes in the Policy in the present context. He also revealed
about some of the recent initiatives of Department of Electronics & IT, Govt. of India and STPI, regarding
proposed incentive scheme for dispersal of IT Industries to Tier II/Tire III cities, incentivizing the MSME
units as well as strengthening the Incubation for development of products & IPR. He enlightened about
the recently announced National Policy on Electronics & IT which is very ambitious and hopeful that
these recent initiatives by DeitY & STPI would foster the growth of IT exports.
Then, the representatives of IT Industries were invited to place their suggestions one by one.
6. The representative from NASSCOM, Eastern Zone suggested that 3% of state IT budget (outside the NeGP)
should be reserved for local IT companies on domicile basis.
7. The representative from AABSYS requested that STP scheme should continue further. He also suggested
that a single window mechanism should be framed for all Customs related permissions at STPI and
formulation of effective marketing development assistance.
8. The representative from Infosys suggested for defining life span of Custom bonded assets and automatic
de-bonding after end of life. He requested for provision of single window clearance mechanism and
raised the issue of e-waste which needs to be promoted in EHTP.
9. The representative from CITE congratulated STPI for taking the country towards global leadership in IT
exports. He requested for re-introduction of IT exemption under 80-IA benefits for private infrastructure
service provider. He suggested for automatic renewal of LOP of Pvt. infrastructure service provider/IT
86
Park and all exemption which are applicable for STP units should also be passed to the STP IT Park. He
also requested for passing all SEZ benefits for STP IT Parks for level playing field.
10.The representative from Enterprise Systems Solutions requested for simplification in Customs bonding
procedure under a single window provision at STPI. He also requested for automatic approval of DTA
Sales.
11.The representative from Cybertech Solution and Multimedia suggested that STPI should facilitate trade
delegation to African and Latin American countries to tap the virgin market. He also suggested that
STPI should open offices in these countries to work as liaison office for STP units to promote IT exports.
He suggested since STPI has PAN India presence, it may form SPV for product development which would
boost the production in domestic market.
12. The representative from Discoverture Solutions requested for extension of STP scheme with Income Tax
exemption and suggested that the Service Tax should be exempted instead of reimbursement.
13. The representative from Silicon Techlab requested that STPI should create a marketing platform for SME
unit and mechanism for certification of bench marking of product and services.
14. The representative from Mahindra Satyam emphasized on rural BPO and suggested that special incentives
should be offered for SME/MSME units in rural areas. He suggested for organizing some IT events
regularly to promote the IT visibility. He also raised the issue of problem in getting RBI approval for
delayed submission of Softex and other labour related issues for operating 24 x 7 and women working
in night shift.
15. The representative from Affixi Technology suggested that earning through royalty should be counted as
NFE and requested for enabling provision for receipt of payment in foreign currency through credit card
and making available of ESCROW services. He gave emphasis on skill development to make the passed
out students employable in IT industry.
16.The representative from SPARC suggested that STPI should make provision of overseas incubation at
subsidized rate for STP units for better market linkage for exports.
17. The representative from AuroIn India Ltd. raised the issue of double taxation on export revenue at their
foreign office and also in India and payment gateway issue for remittance of foreign currency through
credit card.
18.The representative from Semtech Corporation raised the issue of exorbitant price of real estate at
Bhubaneswar and suggested that Govt. should come up with more facility to balance between demand
and supply. He requested for clear guidelines for transfer pricing norms.
19. The representative from Luminous Infoways requested for special incentive for women entrepreneurs and
requested for longer incubation time.
20. The representative from TCS suggested for creating sales and marketing platform for SMEs to sell their
product and services through a common portal. He also raised the issue of e waste and requested for
policy guidelines on this.
21. The Sankalp Semi Conductor emphasized on co-existence of industry with academia in line with teaching
hospital method and suggested for distinct set of incentives for tier II cities. The representative from
ProcessMap raised the issue of problems from State Labour Department for operating 24 x 7 operations
87
and night shift.
22.The representative from Seenet Consultancy, Rourkela suggested that special focus should be given on
Tier III cities or else if both the Tier II and Tier III cities are treated at par then industry will tend to
concentrate in tier II cities and Tier III cities will remain neglected as before.
23. The representative from Karma Strategy suggested for taking necessary steps to make global recognition
for STP units.
24. The representative from JSS IT Solution suggested for making available of venture funding for SME and
MSME unit, automatic renewal of STP license and extending marketing assistance.
25. Prof. Ashok Panda from CITE suggested for exploring possibility of utilization of extra resources available
at Engineering Colleges and Technical Institutes by the IT units for optimum utilization of the facility and
hence reducing the cost. He requested that Govt. should give emphasis on enhancing the employability
among passing out students and starting internship programme on incubation and entrepreneurship.
26. The representative from Waterford, Berhampur requested for special emphasis on innovation and product
development.
Concluding the proceedings Shri M.S. Padhi, Commissioner-cum-Secretary, Department of IT, Govt. of Odisha
enlightened the gathering regarding the new initiatives being planned for promotion of IT sector in the State of
Odisha. He reveled that the revised ICT Policy of the State to be announced very soon. He assured the Industries
all possible support from the State Govt. and promised to look in to the labour and other issues faced by the IT/
ITES and ESDM sector.
In their concluding address, DG, STPI and Addl. DGEP thanked for the suggestions from the Industry and requested
for written and specific suggestions to take their views forward.
At last, Shri Devesh Tyagi, Director, STPI-HQ extended Vote of Thanks.
88
Appendix V
Sl.
No.
List of Relevant Circulars & Notifications
Gazette /Circular & Notification No.
Particulars
1.
Gazette of India dt. 2/3/1993
The STP/EHTP scheme was gazette notified with all
the benefits under the EXIM policy applicable
2
Customs Notification No. 52/2003
dt.31/3/2003
Imports, Re-export, Inter Unit transfers etc.
3
Customs Notification No. 22/2003-CE
dt.31/3/2003
Central Excise Duty Exemptions
4
Customs Public Notice No. 54/2004
dt.17/6/2004
Procedure for Import by EoUs through post /courier
5
Customs Circular C.No.VIII/68/2005
Cus Tech dt.25/5/2005
Procedure on DTA Sales by EOU/EHTP/STP units
6
Customs Circular No. 17/2003 dt.
24/3/2003
Removal of Laptop computers and Video Projection
systems temporarily out of EOU or EHTP/STP/SEZ
unit
7.
Customs Circular No. 7/2006-CUS dt.
13/1/2005
Procedural Relaxation under EOU, Gem & Jewellery
export promotion scheme with respect to Debonding from EOU Scheme, DTA Sales, Verification
of Premise of EOU/EHTP/STP, Inter Unit transfer of
Manufactured goods, Sharing of Goods between
EOU/STP Units, Import/Procurement of DG sets,
Re-warehousing Certificate, CT3 & Procurement
certificate.
8.
Customs Notification No. 106/2001Customs dt. 10/10/2001
Common Sharing of certain equipments between
owner of the importer unit and the unit located in
the same compound / nearby /adjoining premise.
9.
Customs Public Notice 138/2002 dt.
19/09/2002
100% EOU Scheme
10
Central Excise Notification No.
49/2001 dt. 10/10/2001 (Amendment
to Customs Notification 138/91 and
140/91 and Central Excise Notification
1/95.)
Common Sharing of certain equipments between
owner of the importer unit and the unit located in
the same compound / nearby /adjoining premise.
11.
Customs Notification No. 50/2005
dt.20/5/2005
Relaxation inn procedural norms for capital goods
transfer / requirements of captive power plants /
import of samples etc for EOU /STP/SEZ.
89
Sl.
No.
Particulars
12
Master Circular No. / 08 /2005-06 dt.
Export of Goods and Services
1/7/2005 amendment to RBI Master
Circular No. 3/2003-04 dated 1st July,
2003
13
RBI Circular: A.P.(Dir Series) Circular
No. 61 dt. 31/1/2004
Exemption from declaration of export of Goods &
services whose value does not exceed USD 25000/-
14.
Customs Notification No. 153/93Cus dt. 13/8/1993 as amended by
101/95-Cus dt,26/5/1995, 33/97-Cust
dt.1/4/1997, 55/99-Cus dt. 7/5/1999
and 71/2000-Cus dt. 22/5/2000.
Telematic Infrastructural Equipments for software
export (IT Parks)
15.
dated 22.09.2000 for issuing the Rewarehousing Certificate
Customs-Procedure regarding duty free imports of
goods by units of STP under 100% EOU Scheme
16.
dated 17/10/2001
100% EOUs /STP/EHTP units – Scheme & Procedures
17.
Customs Circular No. 91/2002-Cus dt.
20/12/2002
Transfer of Unutilized Raw Materials from one EOU/
EPZ/STP/EHTP unit to another EOU/EPZ/EHTP unit
under paragraph 6.16 of the Policy.
18.
Customs Circular No. 58/2000-Cus
dt.10/7/2000
Software Import through datacom links in case of
EPZ/EHTP/STP/EOU
19.
Direct Tax Notification No. S.O.890(E)
IT enabled products and services eligible of tax
exemptions as per Income Tax Section 10A
dt.26/9/2000
90
20.
Customs Notification No.47/98Customs dt. 16/7/1998
Donation of Computer & peripherals to NGOs.
21.
Customs Circular No. 7/2005 dt.
14/2/2005 (F.NO.305/14/2004-FTT)
Extension of warehousing period of CG imported by
EOU/EHTP/STP.
22.
F.No.200/20/2006-ITA-I dt. 31/3/2006
(Circular from Finance Ministry)
Deduction of Income Tax under section 10AClarification
23.
The Foreign Trade (Development and
Regulation) Act, 1992 No. 22 of 1992
Foreign Trade Act
24.
Customs Circular Cir No. 17/2006 dt.
1/6/2006
Revision of Foreign Trade Policy (FTP) announced
on 7/4/2006 – Amendment of notification relating
to EOU and Gems & Jewellery sector and procedural
changes made effected – reg.
25.
Nil dt. 4/3/2006
List of services covered under service tax (Union
budget service tax levy w.e.f. 1/3/2006.
Sl.
No.
Particulars
26.
Customs Circular Nil dt. 12/7/2006
Customs –Inter unit transfer of CG and manufactured
goods under notification 52/2003 dt. 31/3/2003
- All goods under Annexure –I of 52/2003 dt.
31/3/2003 would qualify for Inter Unit Transfer
provided proper records are maintained (earlier
interpretation – only goods under sl. No. 1 of
Annexure –I of 52/2003 dt. 31/3/2003
(D.O.C. No. VIII/48/41/2006 ….)
27.
No. 15(87)/2000-IPC dt. 2/3/2006 from
MCIT and DGFT ( Commerce Ministry)
notification Nil dt. 30/1/2006
Exercise of powers conferred under FT (D & R)
Act, 1992 by designated officers of DeitY for
implementation of STP & EHTP schemes.
28.
No. 15(100)/93-Export dt. 24/6/1993
(Dept. of Electronics, Industry
promotion Division)
Delegation of powers to jurisdictional directors of
software Technology Parks (STPs) by the IMSC.
29.
Customs Public Notices – 09/2005 dt.
100% EoUs/STP/EHTP Units – Scheme and
Procedures
18/1/2005
30.
Appendix 14-I-G of Foreign Trade
Guidelines for monitoring the performance of EOU/
SEZ/STP/ EHTP units.
Policy 2004-2009
31.
Nil dt. 26/3/1999
List of ITA-I items
32.
Chapter 6 of Foreign Trade Policy
2004-2009
Policy related to EoUs, EHTPs, STPs and BTPs.
33.
Trade facility No, 71/2005 dt.
1/5/2005
Fast Track clearance procedure – norms of
examination for imported goods by eligible EoUs.
34.
F. No. 01/92/180/21/AM05-PC.II dt.
19/12/2005
Permissibility of duty free import of used computers
etc., for EOU/ST/EHTP units.
35.
Appendix 10 of Foreign Trade Policy
List of services.
2004-2009
36.
Chapter 2 of Foreign Trade Policy
General provisions regarding imports and exports.
2004-2009
37.
RBI – AD (MA Series) Circular No. 1 dt.
8/1/1999
Export of Software in Non-Physical form
91
Appendix IV
1. Query
Industry Response to Questionnaire
Need for change/modification in the mandate of the Software Technology Park (STP) and
Electronic Hardware Technology Park (EHTP) Schemes
Response
R1.
Continuation of direct tax benefits and introducing less cumbersome indirect incentives
In the present context, the competitiveness of STP units has reduced due to increasing cost structure
in India and withdrawal of direct tax incentives to STP units. This has pushed the cost / cash flow
upwards and making it more difficult for the small and medium sized companies to sustain in the
era of recession. For the survival of new formed companies and for small companies, this makes
a lot of difference. To promote the exporting units especially in the SME sector, Govt. should
reconsider the tax exemptions to STP units. Other indirect incentives shall also be made available
and the process should be less cumbersome.
(LT apparel Pvt. Ltd., Bangalore), (First American (India) Private Limited, Bangalore)
(Broadcom India Research Pvt Ltd, Bangalore), (Acclaris Business Solutions Pvt. Ltd.,
Kolkata)
(ProcessMAP Infotech Pvt.Ltd., Bhubaneswar), (Atrenta (I) Private Ltd., Noida)
(IBS Software Services Private Limited, Thiruvananthapuram),
(Enzigma Software Pvt. Ltd, Pune), (Lexmark International India Pvt. Ltd., Kolkata)
(M/s PHP Workshop, Nagpur), (HCL,Noida)
R2.
Support to new ideas and fiscal incentive
It requires a change in the approach, Enabling the SME IT/ITES AND ESDMsector and the
infrastructure support for the new ideas. The fiscal incentive can be extended on export, employment
opportunity created. Most important is the Talent enhancement support, infrastructure and other
fringe support to new ideas.(Infosys Ltd., Bangalore), (Infosys Limited, Bhubaneswar)
R3.
Encouragement to SMEs and hardware companies
In current policy all IT companies are considered same irrespective of their size, revenue, staff
etc.. companies have different challenges at different level. SME sector should be considered for
benefits. Benefit can be based on revenue in SME. there can be revenue slabs and benefits attached
to them. Tax holidays should be given to small and medium size companies, as they are already hit
hard by current taxes and it will be difficult to survive in presence of large companies. Hardware
companies need to be encouraged to manufacture/assemble hardware in India to bring hardware
procurement Cost down for us and software users.
(HyTech Professionals India Pvt Ltd, Noida), (Erevmax Technologies Pvt. Ltd, Kolkata)
(Maree Technologies, Imphal), (Qualex Systems Pvt Ltd, Pune)
92
R4.
Given that business environment often fluctuate from favorable to unfavorable; Industry establisher
schemes such as these should be reviewed regularly. Especially in the current scenario where the
end customer (western world) economies are still not fully out of the words, where inflation is
very high, competition from other countries is intense, stipulations made some time ago may
no longer apply in its entirety and additional considerations need to be made. Since the STP &
EHTP Schemes were formulated during early 90’s, there is a urgent requirement of updating these
schemes in the present context to make it attractive and relevant at par with other Export Oriented
Scheme especially SEZ.
Exports are dependent on the Global economic condition and export -import policy for any country.
In the recent economic downturn witnessed by US and followed by Europe, many India companies
have been badly effected. While US responded to the downturn by restructuring its immigration and
outsourcing policy, Europe is also focusing on its economic policies. This calls for a modification
in the mandate of the STP scheme. Stimulus need to be given to the IT and ITES service providers.
To sustain the current growth rate, it is recommended to provide new incentives to the IT and ITES
sector.
(Egon Zehnder Information & Research Services Private Ltd, Noida)
(Confederation of Information Technology Enterprises, Bhubaneswar)
(Confederation of Indian Industries, Bhubaneswar)
(Discoverture Solutions India Private Ltd, Bhubaneswar), (Mindfire Solutions,
Bhubaneswar)
(JSS IT Solutions Ltd, Bhubaneswar), (Aabsys, Bhubaneswar)
(AuroIN India Ltd., Bhubaneswar), (Efextra Esolutions Pvt Ltd, Noida)
R5.
Depending upon the location STPI should suggest the entrepreneur of that location, about the
project which are viable for small & Big entrepreneur and what are the Govt. policy. Annual
meeting and regular guidance, seminars should be arranged to create awareness. STPI is working
nicely and involve in implementing the policies. STPI should circulate the changes in the policy on
regular basis to units.
(SeeNet Consultancy Services Pvt. Ltd, Rourkela), (Swaraj Enterprise Pvt. Ltd., Rourkela)
(Best Coder Software Pvt Ltd, Patna), (Cummins Research & Technology Ind. Ltd, Pune)
R6.
Single window clearance
Majority of the successful Indian IT companies can trace their beginning as STP unit. The original
STP scheme and its benefits including the income tax related one has encouraged and helped set up
business units by IT technocrats and entrepreneurs. STP scheme has tremendously helped Indian
IT industry and one of its success factors. The scheme has helped IT knowledge and experience to
culminate to business and to earn foreign exchange for the country. STP should be transformed
into a single window promotion cum support organization so that an aspiring technocrat can get
all of his requirements processed through STPI like licenses for export/import, custom bonding,
VAT and Sales Tax registration, PF/ESI registration, Trade License etc. on payment of reasonable
fees and service charges to enable the entrepreneur free to attain to his business.
(Ideation Technology Solutions Private Limited, Kolkata), (MSCI Services Pvt Ltd., Navi
Mumbai)
(M/s PHP Workshop, Nagpur), (DigIndia Technologies Private Limited, Nagpur), (Efextra
Esolutions Pvt Ltd, Noida)
93
R7
This industry is now treated on par with other manufacturing industry which is not correct at this
scenario. IT industry is bringing more foreign currency to the country, hence some kind of fiscal
benefits need to be given to have sustained growth of IT industry.
(Cognizant Technology Solutions India Pvt. Limited, Pune)
(Braahmam Net Solutions Pvt Ltd, Noida), (Cummins Research & Technology Ind. Ltd, Pune)
R8
Paper less system is to be insisted to avoid delays. Submission of various reports should be made
online and less time consuming. Online certification and auto check parameters from servers will
help to save time. There should be stress on online process for getting approvals. Status tool needs
to be automated which will help in reducing the timelines and enhance transparency.
(Prothious Engineering Services P. Ltd., Navi Mumbai)
(Varian Medical Systems India Software Pvt. Ltd, Pune), (HCL,Noida)
R9
Yes, there is need to modify Software Technology Park (STP) and Electronic Hardware Technology
Park (EHTP) Schemes. 1. Tax benefits should be made available to new units for Ten years. 2.
Service tax exemption should be allowed on STPI units. 3. Review of Tranfser Pricing rules, to
avoid unnecessary litigation. 4. Remove MAT (Minimum Applicable tax) for such units.
R10
(Sopra India Private Limited, Noida)
Yes, following ones: 1. Definition of IT/ITES AND ESDMservices include in the scheme. 2. Specific
provision on the services allowed to be performed from bonded are of one STPI legal entity to
the other STPI entity should be included in the scheme. 3. Provision on the usage of bonded area
within the Firm during BCP situations should be included in the scheme. 4. Life of assets that are
bonded should be defined and after end of life there should be no requirement of debonding/taking
permissions for disposal. Companies should be given the right to dispose of assets after end of life.
5. The definition of ‘consumables’ (these do not require debonding) should include UPS batteries
as these need to be replaced more frequently. 6. Simplification of process of scrapping assets that
is at their end of life. The current policy requires the assets to be dismantled to its component parts
(e.g. plastic, metal, fabric etx) which are a herculean task before an application is submitted for
debonding.
(Morgan Stanley Advantage Services Pvt. Ltd., Navi Mumbai)
Changes sought: 1.Working from Home provisions to be included in the policy. 2. Business
continuity Plan provisions to be included in the Policy. (Accenture Services Pvt Ltd, Bangalore)
2. Query
Boosting IT/ITES AND ESDMexports and investment in Tier-II/Tier-III cities
Response
R1
Although Govt. of India has introduced the SEZ scheme the Medium and Small IT units still prefer
STP Scheme due to higher cost of infrastructure and lack of flexibility of operation in Special
Economic Zones. More over Most SEZs are located in or around the large metropolis and does
not serve the purpose of industry in Tier 2/Tier 3 towns. Hence the need of STP Scheme is vital to
promote the Tier 2/Tier 3 towns and to achieve a distributed and balanced growth.
94
R2
Tax break is always welcome. In addition, one of the most important barriers is availability of
skilled manpower in tier-II and tier-III cities. If this deficiency can be bridged via medium of special
institutes that impart the necessary skills to upcoming graduates, then it will increase penetration
into tier-II and tier-III cities. Hire, Train and Build competencies in Tier-II and Tier-III, 2. Integrate
with local institutions/universities.
(iT Gurus Software, Navi Mumbai), , (AuroIN India Ltd., Bhubaneswar, Bhubaneswar)
R3
(Xchanging, Bangalore), (Discoverture Solutions India Private Limited, Bhubaneswar)
Building an ecosystem (air, rail, road connectivity, telecommunication infrastructure, availability of
trained manpower, law and order, business ambiance, education facility, recreation facility, reliable
power infrastructure etc.) in the Tier II / Tier III is very important to attract the entrepreneurs /
investors and create job opportunities. Infrastructure development, incentive for both the employer
and employee setup/work out of these cities, providing easy capital for growth/expansion thru
Govt. agencies.
(Amba Research India Private Limited, Bangalore), (Ideation Technology Solutions Private
Limited, Kolkata)
(Acclaris Business Solutions Pvt. Ltd., Kolkata), (Infosys Limited, Bhubaneswar), (Qualex
Systems Pvt Ltd, Pune)
(Cummins Research & Technology Ind. Ltd, Pune), (Innovadors Lab, Bhubaneswar)
(Chillibreeze Solutions Private Limited, Shillong), (Atrenta (I) Private Ltd., Noida),
(NathCorp Pvt. Ltd., Ranchi)
(Ardee Business Software Solutions, Rourkela), (MSCI Services Pvt. Ltd., Navi Mumbai)
(Erevmax Technologies Pvt. Ltd, Kolkata), (DigIndia Technologies Private Limited, Nagpur)
(Kopera Software, Pune), (WNS Global Services Pvt. Ltd., Pune), (Best Coder Software Pvt.
Ltd, Patna)
(NIIT Technologies Ltd, Kolkata), (Techyog, Bhubaneswar)
R4
By setting up STPI centers in Tier II and III cities, companies will by encouraged to
set up units in such cities. Only when there is a tax incentive companies will move to
such cities. When companies move to Tier II and III cities, automatically, employment
opportunities will increase. Infrastructure is a must for companies to move to tier II
cities. Larger companies shall be given special incentive to co-locate to tier II/III cities.
(Electronics for Imaging India Pvt Ltd, Bangalore), (Data - core (india) private limited,
kolkata)
(Lexmark International India Pvt. Ltd., Kolkata), (Cognizant Technology Solutions India Pvt.
Limited, Pune)
(ECI Telecom India Pvt. Ltd, Navi Mumbai), (Zensar Technologies Limited Unit IV, Pune)
(Web Access India Pvt. Ltd, Navi Mumbai), (M/s PHP Workshop, Nagpur)
95
R5
Government should give special incentives and extra sops for attracting investors in Tier-II/
Tier-III cities. The infrastructure should be improved at par with metros. Initially for few years,
Govt. should provide incubation facility with subsidized cost and support in marketing. Special
provisions in the scheme to encourage entrepreneurs to set STP units and STP parks in Tier II/
III cities. Availability of land, quicker disposal of STP park approval process is a necessity. There
needs to be enabling provisions in the STP policy which would accelerate the process.
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (Mindfire Solutions, Bhubaneswar)
(Confederation of Indian Industries, Bhubaneswar), (Braahmam Net Solutions Pvt Ltd,
Noida)
(IBS Software Services Private Limited, Thiruvananthapuram), (ProcessMAP Infotech Pvt.
Ltd., Bhubaneswar)
3. Query
(Egon Zehnder Information & Research Services Private Limited, Noida)
Aabsys, Bhubaneswar), (SeeNet Consultancy Services Pvt. Ltd, Rourkela)
(TATWA Technologies Ltd, Bhubaneswar), (JSS IT Solutions Ltd, Bhubaneswar)
The reasons why countries like Philippines, Ireland and Vietnam are threat to the STP/EHTP
units
Response
R1
The low cost, with quality. Our education system has to be strengthened and more emphasis and
encouragement should be given for basis science. Only then we will be able to have thought of
survival. Quality along with low cost will help us survive else all these outsourcing sector will
vanish within a few years from now.(Electronics for Imaging India Pvt Ltd., Bangalore)
R2
Now it is the concept of best source and the companies would venture into a country which
has better infrastructure, lower cost and trained manpower. From that perspective these
countries are coming up and might be an alternative destination for the global investors.
Regulatory environment, prolong tax litigation (both on direct and indirect taxes) in India
resulting in uncertainty & instability. Also, these are not the only countries which are threat
to STP, there are several other European & Asian countries which could be potential threat.
R3
(Infosys Limited, Bhubaneswar), (BCD Travel India Pvt Ltd), Bangalore)
(Acclaris Business Solutions Pvt. Ltd., Kolkata), (Colt Technology Services India Pvt Ltd,
Bangalore)
(Lexmark International India Pvt. Ltd., Kolkata), (Innovadors Lab, Bhubaneswar)
(Portal Infotech, Bhubaneswar), (HyTech Professionals India Pvt Ltd, Noida), (PHP
Workshop, Nagpur)
China has a huge domestic market especially for EHT. Our EHTP need to be well supported to grow.
There is need to align the government sponsored large projects for using the production of EHTPs
like -national ID cards, set top box, GPS modules, solar panels, LED lights etc. etc.
96
(Ideation Technology Solutions Private Limited, Kolkata)
R4
They are more active in providing infrastructure and facilities. Cost of manpower is very competitive.
(Systems Technology International, Bhubaneswar), (Erevmax Technologies Pvt. Ltd,
Kolkata)
(TATWA Technologies Ltd, Bhubaneswar), (Xoriant Solutions Private Limited, Navi Mumbai)
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (Qualex Systems Pvt Ltd, Pune)
R5
They are aggressive in policy making and implementation. They build the people, provide the
infrastructure and make it easy to compete. They also bring the market to the units through multiple
conventions which attract worldwide quality customers. The boost given by their governments
by way of infrastructure, technology up gradation help, language gap bridging and other sops
provided result in lower cost of services and solutions as compared to India.
(Discoverture Solutions India Private Limited, Bhubaneswar), (JSS IT Solutions Ltd,
Bhubaneswar)
(Mindfire Solutions, Bhubaneswar), (Aabsys, Bhubaneswar), (Hi Technology & Services,
Rourkela)
R6
Philippines have already crossed us in BPO/Call Center segment. Countries like China & Philippines
are aggressively progressing. Since we cannot match with China in Hardware Segment, at least
Govt. should do something and seriously think so that advantage India enjoys in Software front
should not be lost in future.
R7
Reasons (i) Govt. encouragement hassle free. (2) Constant Power Supply (3) Dependable high speed
internet. (4) Provision of proper infrastructure. (5) Building space provision (6) Relaxation in tax rules.
(NathCorp Pvt. Ltd., Ranchi), (Noratel India Power Components Pvt Ltd, Thiruvananthapuram)
(HCL, Noida), (DigIndia Technologies Private Limited, Nagpur), (Uno Digital Pvt. Ltd.,Patna)
R8
Till date, India is dominating but slowly the countries like China, Philippines, Ireland and Vietnam
have improved their manpower skills, government have taken initiative to train manpower,
especially the English language. Out here, in our country quality manpower is not produced,
because correct kind of trainers is also not available. Private engineering colleges are generating
manpower, but this manpower in most of the cases is not useful for the industry. The problem lies
with the Course Curriculum, which are old and outdated.
(Ardee Business Software Solutions, Rourkela), (SeeNet Consultancy Services Pvt. Ltd,
Rourkela)
(Kopera Software, Pune)
R9
Yes, absolutely they are, and more so from the last year due to the sunset of the income tax benefits.
In current economic situation, China, Philippines and other growing economies are more serious
competitors to Indian market, and they are already eating up into the market share very quickly.
(iT Gurus Software, Navi Mumbai)
R10
Yes. Philippines is growing very firstly in BPO and ITES sector.
(Cummins Research & Technology Ind. Ltd, Pune)
97
R11
YES. Because they operate such business from their house, so it becomes cottage industry for
those people. They make cost cutting by allowing the people to do the job at their home.
(Swaraj Enterprise Pvt. Ltd., Rourkela)
R12
Withdrawal of Income - Tax incentives in India whereas incentive is available in these countries.
Aggressive and Uncertain Transfer Pricing Regime is dampener to captive units of MNCs,
Aggressive Transfer.
(Zensar Technologies Limited Unit IV, Pune)
4. Query
Actions required to create an enabling ecosystem for the STP/EHTP
Response
R1
Elimination/ reduction of multiple approvals required from STPI and Excise/ Customs. 2. Increased
automation for tracking of approvals/ sharing of documents and reduction of movement of manual
documents.
(Broadcom India Research Pvt. Ltd, Bangalore), (Lexmark International India Pvt. Ltd.,
Kolkata)
R2
Creating more tier-II and III city centers. Its easier to groom talent, less attrition, better city
facilities and easier to create to infrastructure. Creating a better eco system and more employment
opportunity. (Infosys Ltd, Bangalore)
R3
A searchable database of STP units and their skills and services they may be able to offer could be
(Alethea Communications Technologies Pvt. Ltd., Bangalore)
useful. R4
Infrastructure, favorable regulations and objective monitoring mechanism, conducive law and
order as well as political stability. (Acclaris Business Solutions Pvt. Ltd., Kolkata)
R5
Single window support in line with # 1 above. STP Park with module floor area starting from
around 1000 sq ft. and other required infrastructures. Common STP infrastructure for setting up
overseas desk for Indian units.
R6
To compete in the global market we need to have a tax benefit.
(Chillibreeze Solutions Private Limited, Shillong)
R7
Stream line govt. projects so that small units can survive. (Systems Technology International,
Bhubaneswar)
R8
Suitable amendment in policy should be made to allow IT units to run both hardware and software
under STP to create an enabling ecosystem for STP/EHTP units.
(Enterprise System Solutions (P) Ltd, Bhubaneswar)
R9
Both should be integrated for rendering services.
R10
Policy should be enabling STP to focus on SMEs.
(Mindfire Solutions, Bhubaneswar)
(TATWA Technologies Ltd, Bhubaneswar)
R11
Skilled workforce, favorable tax norms.
(Suyog Computech (P) Limited, Bhubaneswar)
98
R12
A Collaborative effort from the regional STPI and STP units is needed. Members of different STP
should give some particular time for a get together every month involving professionals.
(Techyog, Bhubaneswar), (Swaraj Enterprise Pvt. Ltd., Rourkela), (iT Gurus Software, Navi
Mumbai)
R13
Awareness, promotion, facility centre.
(Innovadors Lab, Bhubaneswar)
R14
Exchange of services enabling synergy within the Organizations registered under STPI. Having
entrepreneur groups who can work towards business mergers and acquisition with other countries.
(AuroIN India Ltd., Bhubaneswar, Bhubaneswar)
R15
1. Help improve the level of people to compete effectively 2. Provide Infrastructure at a subsidized
cost during initial years and then at a reasonable cost, subsequent years 3. Ensure that the small
and medium units also survive and thrive along with the bigger ones.
(Disc overture Solutions India Private Limited, Bhubaneswar)
R16
Infrastructure creation will always remain key, by infrastructure we mean social infrastructure
adjacent to the software parks, the extensions of the Income Tax benefits need to be done.
(JSS IT Solutions Ltd, Bhubaneswar )
R17
Creating more tier-II and III city centers. It’s easier to groom talent, less attrition, better city
facilities and easier to create to infrastructure. Creating a better eco system and more employment
opportunity.
(Infosys Limited, Bhubaneswar)
R18
Since Hardware Industry is depended on Software, the cluster/IT Park should be built where both
segments would cater their needs from each other.
R19
To be more conscious in utilizing the different forms of energy and working towards a more
environment friendly processes.
(Process MAP InfoTech Pvt. Ltd., Bhubaneswar)
R20
The State Government should provide office locations in prime areas. Full concession on energy
consumptions.
(Luminous Infoways Pvt. Ltd., Bhubaneswar)
R21
Government should take initiative or should work on the strategies on PPP Model.
(Ardee Business Software Solutions, Rourkela)
R22
Ensuring availability of robust infrastructure, trained manpower. Providing incentives to units in
Tier III cities.
(Hi Technology & Services, Rourkela)
R23
Build up more facility and infrastructure not only for big company but small as well.
(Best Coder Software Pvt Ltd, Patna)
99
R24
Relieving from obtaining individual Procurement /CT-3 Certificate for claiming Custom/Excise Duty
exemption. Custom/Excise Duty exemption should be pass on to STPI/EOU units upon producing of
valid Letter of permission and Custom Bonding license u/s 58 of Custom Act instead of obtaining
individual approval transaction-wise. (HCL, Noida)
R25
There should be provisions and facilities for destruction of e-waste. Companies dealing in e-waste
management should be encouraged and given incentives. (RMSI Pvt Ltd, Noida)
R26
To make immediate changes in policies enbling small entrepreneur to set up units in Tier II/III cities
2. Some long term commitment of fiscal benefits
(Braahmam Net Solutions Pvt Ltd, Noida)
R27
Integrate customs/excise and STPI processes similar line with SEZ.
(Noratel India Power Components Pvt Ltd, Thiruvananthapuram)
R28
Awards are good, but we need a higher level of involvement of different STPI units, where they
may share expertise, knowledge and possibly infrastructure as well, to reduce costs and be more
competitive.
R29
Offering incentives to larger companies to setup operations in tier II/II cities. Encouraging
entrepreneurs and startups by providing funding arrangements certain level of Govt. contracts to
small players.
(Web Access India Pvt Ltd, Navi Mumbai)
5. Query
Conceptualizing Incubation
Response
R1
Incubation centers may be set up in High Schools/Colleges/University to tap potential for
training.
(Evalueshops.Com Pvt. Ltd., Bangalore)
R2
It is a great idea for a nodal agency to initiate the incubation activity provided there is no red
tapism/bureaucracy along with the venture capital/funding support. A separate cell for R&D activity
should also be encouraged.
(Kodiak Networks (India), Bangalore)
R3
Creating a strong financially Independent Industry-Academia-Govt forum to ideate and provide
first 3 year fiscal Support, so the idea being implemented and taken to next level of growth.
(Infosys, Bangalore), (Infosys Limited, Bhubaneswar)
R4
Should be focused in Tier -II & Tier -III cities with functional infrastructure, stable internet and
phone connectivity, sharable conference cum training facilities.
(Acclaris Business Solutions Pvt. Ltd., Kolkata)
R5
Acquiring business is paramount to create need for incubation. STP and ESC can enhance
coordination to assist in overseas business growth, help identify business partners abroad,
maintain dossiers of IT organizations country wise as ready beckoner.
100
R6
Incubation should be Plug & Play Infrastructure, marketing support, venture capital support, policy
support and maintenance support.
(Confederation of Indian Industries, Bhubaneswar), (Aabsys, Bhubaneswar
R7
Should have ample scope for facilitating the incubates in terms of infrastructure, technology, and
marketing.
R8
An IT Incubation should be well equipped in terms of technology. High internet speed, facility for
VOIP. Facility of Online conferencing both audio and video. Well ventilated work station. 24X7
internet and power supply. Power back-up in terms of break down. Common conference hall.
(AuroIN India Ltd., Bhubaneswar)
R9
1. Provide capital or loans 2. Provide incubation infrastructure 3. Help market products and services
4. Hook up with Industry experts/panelists.
(Discoverture Solutions India Private Limited, Bhubaneswar)
R10
We need to give more incentive to stp parks to create Incubation centers. There should two modes,
one Incubation mode other Acceleration mode for the IT & ITeS units.
(JSS IT Solutions Ltd, Bhubaneswar)
R11
A complete Incubation should be Infrastructure & amenities, Marketing Support, Back Office
support, Venture Capital & Finance Support, Regulatory Support as well as Mentoring support.
R12
STPI should define the various parameters like starting the IT units and souring of overseas
projects.
R13
Build and give infrastructure in tier 2 and 3 cities equipments and resources.
(Uno Digital Pvt. Ltd., Patna)
R14
Facilities should be made available with well defined scheme. Where people really working on this
field would get attracted.
R15
Depend upon the requirement of the entrepreneur, STPI should create the incubation centre, and
also guide the during the process.
(SeeNet Consultancy Services Pvt. Ltd, Rourkela)
R16
Respective STPI to organize workshops to entertain Industry thoughts on Incubation. Providing
R&D support to Industry could one of the initiatives ( Braahmam Net Solutions Pvt Ltd, Noida)
R17
Provide facility and infrastructure to startups and young entrepreneurs at STP offices at very low
cost and help them bid for small govt. projects.
(Web Access India Pvt Ltd, Navi Mumbai)
R18
Tie-up with construction/reality businesses to provide incubation facilities at affordable rates.
101
R19
STPI need to market the incubation center. This will help the units in set up stage to start operations
early without investing much cost.
(Cummins Research & Technology Ind Ltd, Pune)
R20
By bringing changes in the ICT policy.
(ProcessMAP Infotech Pvt.Ltd., Bhubaneswar)
6. Query
The minimum central (sharable) technical facilities/infrastructure required for growth of
STP/EHTP units
Response
R1
Cloud computing, network sharing, cost sharing, good infrastructure, plug and play facility, reliable
internet connectivity, server farms, library/bank of costly tools, video conference, software, data
center etc. should be made available on common sharing basis at cheaper rate.
(Electronics for Imaging India Pvt Ltd, Bangalore), (Infosys, Bangalore)
(Ideation Technology Solutions Private Limited, Kolkata), (Systems Technology
International, Bhubaneswar)
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (TATWA Technologies Ltd,
Bhubaneswar )
(AuroIN India Ltd., Bhubaneswar), (Discoverture Solutions India Private Limited,
Bhubaneswar)
(Infosys Limited, Bhubaneswar), (Confederation of Indian Industries, Bhubaneswar)
(Aabsys, Bhubaneswar), (SeeNet Consultancy Services Pvt. Ltd, Rourkela )
(Hi Technology & Services, Rourkela), PHP Workshop, Nagpur, (Kopera Software, Pune)
R2
Build up area for ready to use by the Software/Hardware Entrepreneurs in modules. • Internet •
Data Centre • Central Air-conditioning facility • Un-interrupted Power Supply with stand-by Gen.
Set • Convention Hall • Business Lounge • Bank & ATM • Conference & Training Halls (equipped
with latest presentation aids) • Cafeteria • Guest Room & Gym • Security (CCTV, ACCESS CONTROL
& OTHER MODERN SECURITY).
(Confederation of Information Technology Enterprises, Bhubaneswar )
R3
Availability of leased lines even in remote locations. - a cost-effective solution which can enable
smaller companies to effectively use the work-from-home culture to reduce the operational costs.
R4
The STPI has already initiated the job to launch its scheme in various places, apart from the
these, the units would have to be responsible to convey the usefulness of these centers for all the
services these units provides.
R5
A help portal should develop for knowhow on technical and infrastructural developments.
102
R6
Custom Circular No. 07/2006 dtd 13.01.2006: - common sharing of capital goods between STPI
units is allowed by obtaining of approval from STPI and Central Excise & Customs if belonging to
same owner. it may be allowed on intimation basis.
(HCL, Noida)
R7
Telecommunication links, Building, Electricity, banking channel, availability of trained
manpower.
Uniformity in policy implementation and centrally governed online system.
R8
R9
More land allotment, with electricity and broadband subsidies, proper travel communication.
R10
STPI Units should connect with each other through Webinar’s (WebEX) to discuss further.
(Techyog, Bhubaneswar)
7. Query
Measures which may be required to sustain the leadership position of IT Industry through
STP/EHTP Scheme
Response
R1
Margin of import duty benefit vis a vis other qualitative aspects of local purchase may make
entrepreneurs to opt out of the scheme. Any other benefits like increasing the depreciation rate of
bonded goods, incentive to the landlord for providing lease space to STP/EHTP units might lead to
spurt in SMEs showing interest. ( Amba Research India Private Limited, Bangalore)
R2
STP scheme provides enabling environment to conduct business. However, the withdrawal of fiscal
direct tax incentives and denial/ delay of other indirect tax incentives needs to be revisited to
increase the attractiveness of the STP Scheme. If the benefits like in Income tax would be restored
or the facilities at par with SEZ will be offered, then no doubt STPI will sustain the leadership.
(Broadcom India Research Pvt Ltd, Bangalore), (NIIT Technologies Ltd, Kolkata)
(Discoverture Solutions India Private Limited, Bhubaneswar), (Aabsys, Bhubaneswar)
(iT Gurus Software, Navi Mumbai), (Zensar Technologies Limited Unit IV, Pune)
R3
Yes, Support especially for:- Talent availability and grooming Infrastructure Good Data Connectivity
Some fiscal benefit for 1st 3 years ( Infosys, Bangalore), (Infosys Limited, Bhubaneswar)
R4
Yes, an effective and investor friendly scheme would attract more and more companies in SME
segment to sustain in global competition and drive the growth along with big players significantly.
The scheme should focus for both export and domestic market.
(Acclaris Business Solutions Pvt. Ltd., Kolkata), (TATWA Technologies Ltd, Bhubaneswar)
(Systems Technology International, Bhubaneswar), (Portal Infotech, Bhubaneswar )
(Braahmam Net Solutions Pvt Ltd, Noida)
103
R5
STP historically helped germination of potential talents. Orienting STP and its policy and facility
well will help create many fold the creative, competitive IT institutions needed to surmount the
fast developing challenge from other countries.
R6
Yes, STP can act as a driver for growth but the support to exporting units has to be continuous
and persistent. Red tape will discourage units, with the challenge to succeed in the competition
they will find it easier to operate out of STP if there is too much red tape involved.
R7
(Chillibreeze Solutions Private Limited, Shillong), (JSS IT Solutions Ltd, Bhubaneswar)
The scheme should be more automated and statutory compliance in terms of reports should
be made on-line so that paper work will get reduced. The scheme is really good and making it
automated will help companies. It benefits should be restored.
(AuroIN India Ltd., Bhubaneswar, Bhubaneswar), (Qualex Systems Pvt Ltd, Pune)
R8
The STP scheme has been extremely successful in fostering the growth of the software industry.
The phenomenal success of the IT-ITES Industry has been possible only because of the pivotal
role played by the Software Technology Park (STP) Scheme, providing fiscal benefits as well as
conducive environment for the benefit of the Indian IT-ITES Industry. For the long term continuance
of India’s leadership in the IT global market space, the policy may be modified suitably to provided
with the same level of fiscal incentives, for a level playing field by granting income tax exemption/
reimbursement at Par with SEZ as well as vis-a vis counties like China, Philippines, Ireland and
Vietnam etc.
R9
Yes. STPI should make its presence available in technical committees of government and should
prescribe various norms for upcoming IT companies so that they can participate in overseas
business meetings and global tenders. (Luminous Infoways Pvt. Ltd., Bhubaneswar)
R10
The scheme should be more clearly defined and the benefits of it. It should take proactive role to
formulate a nodal centre at each unit to convey about the opportunities exist. Technical and other
assistance and single window system will help. We have ample opportunity to sustain leadership
position but falling short of skill-set, mind-set and awareness on govt. policies. There should be
continuous support to the organization in planning & revenue earning to sustain in the initial few
years and also during the process.
(Innovadors Lab, Bhubaneswar), (Ardee Business Software Solutions, Rourkela),
R11
(Techyog, Bhubaneswar), (Seenet Consultancy Services Pvt. Ltd, Rourkela)
Yes definitely it will protect the interest of ever growing business and expand the growth globally.
This help to grow India at fast speed and tackle the world’s competitive markets. Generate more
employment, earn more foreign currency, rise share in world market and create more options for
huge existed and ever adding talent as strong force for growing India.
8. Query
104
Combining STP/EHTP Scheme: Should STP/EHTP Schemes be combined into a single scheme
that covers Infrastructure services (IT Park) as well
Response
R1
Combining STP/EHTP schemes into a single scheme will simplify the procedure. It will save efforts
of an enterprise operating in both the schemes and will ensure better compliance of the unified
procedures. this will enable both development of Software service and product rollout under one
umbrella and optimize the infrastructure usage. Since there is interdependence between software
and hardware industries, having single scheme should be good provided it caters to the requirement
and interest of the both the entity.
(Amba Research India Private Limited, Bangalore), (Alcatel Lucent India Limited,
Bangalore)
(Acclaris Business Solutions Pvt. Ltd., Kolkata), (Lexmark International India Pvt. Ltd.,
Kolkata)
(TATWA Technologies Ltd, Bhubaneswar), (JSS IT Solutions Ltd, Bhubaneswar)
(Luminous Infoways Pvt. Ltd., Bhubaneswar), (Aabsys, Bhubaneswar)
(Swaraj Enterprise Pvt. Ltd., Rourkela), (MSCI Services Pvt Ltd., Navi Mumbai)
(iT Gurus Software, Navi Mumbai), (IBS Software Services Private Limited,
Thiruvananthapuram)
(Xoriant Solutions Private Limited, Navi Mumbai), (M/s PHP Workshop, Nagpur)
(DigIndia Technologies Private Limited, Nagpur), (Gallagher Offshore Support Services Pvt
Ltd, Pune)
R2
Should not be combined as both are specialized fields and needs staff to understand the problems
and help find their solutions. Both have their different set of processes and problems.
(Maxval Technologies Pvt Ltd, Navi Mumbai), (NIIT Technologies Ltd, Kolkata)
(Suyog Computech (P) Limited, Bhubaneswar), (Infosys Limited, Bhubaneswar)
(ProcessMAP Infotech Pvt.Ltd., Bhubaneswar), (Ardee Business Software Solutions,
Rourkela)
(Noratel India Power Components Pvt Ltd, Thiruvananthapuram), (NathCorp Pvt. Ltd.,
Ranchi )
R3
Keep it separate, once fully fledged centrally governed system exists then it can be combined.
R4
Doesn’t matter whether single or separated, it should be implemented well with least paper work
and more automation. Schemes should be supportive. For operational efficiencies this may be
done.
(AuroIN India Ltd., Bhubaneswar), (Discoverture Solutions India Private Limited,
Bhubaneswar)
105
9. Query
Software Technology Parks/Electronics Hardware Technology Parks should be set up with
primary focus on Tier-II / Tier-III locations of country?
Response
R1
Software Technology Parks/Electronics Hardwar Technology Parks should be set up with primary
focus on Tier-II / Tier-III locations of country. This will encourage companies to move their units to
Tier II/III cities. It can not only help achieve reduction in cost of service/product but also benefit the
local talent. Setting up of unit in such cites would provide local employment and would also check
geographical migration of people. It would also reduce the population and infrastructure burden
on Tier-I cities. The Government machinery as these cities should be more industry friendly and
they should be de-centralized. STPI should also work as a nodal agency between the entrepreneurs
and the agencies to get the business for them
(PointCross.com Private Limited, Bangalore), (Electronics for Imaging India Pvt Ltd,
Bangalore)
(Shiv e-Publishing Technologies Pvt. Ltd., Bangalore), (Alcatel Lucent India Limited,
Bangalore)
(Acclaris Business Solutions Pvt. Ltd., Kolkata), (Lexmark International India Pvt. Ltd.,
Kolkata)
(Mindfire Solutions, Bhubaneswar), (Discoverture Solutions India Private Limited,
Bhubaneswar)
(JSS IT Solutions Ltd, Bhubaneswar), (Infosys Limited, Bhubaneswar), (Aabsys,
Bhubaneswar)
(NathCorp Pvt. Ltd., Ranchi), (Uno Digital Pvt. Ltd., Patna), (Best Coder Software Pvt Ltd,
Patna)
(RMSI Pvt Ltd, Noida), (Business & Decision GDC Pvt ltd, Noida)
(Prothious Engineering Services P. Ltd., Navi Mumbai), (Qualex Systems Pvt Ltd, Pune)
(DigIndia Technologies Private Ltd., Nagpur), (Ardee Business Software Solutions,
Rourkela)
R2
Although Govt. of India has introduced the SEZ scheme the Medium and Small IT units still prefer
STP Scheme due to higher cost of infrastructure and lack of flexibility of operation in Special
Economic Zones. More over Most SEZs are located in or around the large metropolis and does
not serve the purpose of industry in Tier 2/Tier 3 towns. Hence the need of STP Scheme is vital to
promote the Tier 2/Tier 3 towns and to achieve a distributed and balanced growth.
R3
STP/EHTP should be set up across the country and be given equal importance but the services provided
will be highly appreciated in Tier-II/Tier-III locations in the country. One disadvantage of operating from a
Tier-II/Tier-III location is the cost of bandwidth which is more as compared to other locations in the country.
(Chillibreeze Solutions Private Limited, Shillong)
10. Query
Clubbing of exports of STP/ EHTP unit of same entity/owner operating in Tier-I city for the
purpose of meeting Export Obligations/Positive NFE of STP/ EHTP unit of Tier-II/Tier-III
locations.
106
Response
R1
Subsidiary and associated units have been set up by Tier I city units in tier II locations.
This has increased after the withdrawal of tax benefits - to have lower costs. It will be
beneficial for these units to have a combined export income. As long as the units can be
linked together by ownership and client/destination profiles, incomes may be combined. In
beginning the lower tier locations might not have sufficient Export to meet the requirement,
clubbing the exports will encourage establishing unites in the lower tier locations. It will
give the large player operating in Tier-I city to support the tier-II & III city. Clubbing would be
more attractive for the companies to have their operations set up in Tier -II & Tier -III cities.
(Evalueshops.Com Pvt. Ltd., Bangalore), (Amba Research India Private Limited, Bangalore)
(Infosys, Bangalore), (Acclaris Business Solutions Pvt. Ltd., Kolkata)
(TATWA Technologies Ltd, Bhubaneswar), (AuroIN India Ltd., Bhubaneswar)
(JSS IT Solutions Ltd, Bhubaneswar), (Infosys Limited, Bhubaneswar),
(Aabsys, Bhubaneswar), (MSCI Services Pvt Ltd., Navi Mumbai)
(Prothious Engineering Services P. Ltd., Navi Mumbai), (HCL, Noida), .( RMSI Pvt Ltd,
Noida)
Ardee Business Software Solutions, Rourkela), (Suyog Computech (P) Limited,
Bhubaneswar)
R2
Yes. It can be a good option. Weighghed average benefit can also be given for exports
made by units set up in Tier II/III cities for the purpose of completion the export obligation
and benefit in Income tax for income and Customers benefit for imports can be given.
No keep separate and manage effectively. 11. Query
Broad-banding: (Inclusion of more IT services)
Response
(Emids Technologies Private Limited, Bangalore)
R1
Cloud computing R2
Onsite development and support services which has recently been challenged by tax authorities,
business continuity management, disaster recovery management, real estate/facility management
services (Colt Technology Services India Pvt Ltd, Bangalore)
R3
Yes, IT services have a great market potential across the world and inclusion of that would definitely
be beneficial. (Acclaris Business Solutions Pvt. Ltd., Kolkata)
R4
IT-enabled CA services through IT should be included.
R5
Services Disaster Recovery, Testing, Repair, Reconditioning, Trading should be included.
107
R6
Special incentives or benefits for companies investing in R&D.
R7
All IT services should be by default included as it is a constructive step towards boosting and
grooming IT industry.
R8
Consultancy, Manpower Service and Training should be included in the IT and allied services.
R9
Disaster Recovery, Trading Services, Repair, Recondition & Testing services should be Included.
R10
Services like Business Continuity, Disaster Recovery, Testing, Repair, Reconditioning, and Trading
should be included.
(Aabsys, Bhubaneswar)
R11
All types of IT services should be included in the STP Scheme.
R12
Training, Skill Development for it industries.
R13
Domestic Sales should be given equal importance. In view of global recession and anti-outsourcing
feelings in Mature Economies, exports are and will become more and more difficult.
R14
yes in present market scenerio following new IT Services are proposed to be include under STP
Scheme: Testing & Integration, Disaster Recovery, Knowledge Process Outsourcing (KPO), Business
Process Management (BPM), Knowledge Process Management (KPM) (HCL, Noida)
R15
Yes, it has to be brought into one umbrella, As the service export has not understood clearly by
different authority at state as well central level. (Infosys Limited, Bhubaneswar)
R16
Yes.more competitive and latest technology to be provided to make business competing globally.
12. Query
Broad-banding: R & D Activities
Response
R1
The R&D activity should be pursued through the units setup by incubation centre of STP, whereby
the monitoring the effectiveness of the R&D can be measured. A formula can be worked out to give
the benefit to such units and accordingly adjust their NFE.
R2
(Kodiak Networks (India) Private Ltd., Bangalore)
R&D Services other than Telecom should be included like - R&D into Plastics, Fuel cell.
(Alcatel Lucent India Limited, Bangalore)
R3
108
Yes. Trend analysis for new technologies. (NIIT Technologies Ltd, Kolkata)
R4
Yes! But for R & D NFE should be relaxed. This will create a comfort zone within the organization
to try needing innovations.
(AuroIN India Ltd., Bhubaneswar), (Mindfire Solutions, Bhubaneswar)
R5
R& D in the field of Electronics and computer hardware manufacturing.
R6
Yes strongly and it should for SMEs and backed by incentives.
R7
Yes, areas to be focused on could be nanotechnology, mobile commerce.
R8
The entire expenditure on R & D should be adjusted for calculation of NFE so as to encourage units
in R & D.
R9
Yes, we can take 20% of the spending on R&D as meeting the NFE. It’s like investing for the
future
R10
IT Units should be encouraged to R&D projects. STP/EHTP units engaged in R& D activities should
be permitted to meet the NFE/Export Obligation within maximum period of 10-15 years.
R11
Yes absolutely, entrepreneurs with a vision for R & D Projects would be encouraged.
R12
Yes. Provision of infrastructure, financial assistance, and tax holidays.
R13
Yes in field of animation game development and Visual effects services.
(Uno Digital Pvt. Ltd., Patna)
R14
R&D Projects should be encouraged, at present India’s share in R&D activities is minimal. In case
of R&D projects / activities, tax benefits should be for longer period, as gestation period in case
of R&D units is higher than others. R15
Yes R & D is important for the growth of the country. Interfacing of software with the hardware to
achieve many results, especially in the field of remote sensing and other RF controllers.
(Maxval Technologies Pvt Ltd, Navi Mumbai)
R16
R&D is very important for any organization and it should be encouraged.
(MSCI Services Pvt Ltd., Navi Mumbai)
R17
Yes. Currently the focus of almost all units is on providing services, which gives a steady (but
assured) cash in-flow. Not many units try to take risks in R&D. The areas of R&D could be in
computer science, new consumer focused applications, etc.
(Qualex Systems Pvt Ltd, Pune)
109
R18
Yes for alternative energy development entire sector, drug and medicine, effluent treatment plants
and organic products etc. (Prothious Engineering Services P. Ltd., Mumbai)
R19
YES. Basically on Hardware to defeat china.
13.Query
Supplies in DTA counted for NFE
Response
R1
Yes it can be more attractive by giving more direct benefits etc.
R2
STP/EHTP Unit may be allowed to sell goods and services without limit in the Domestic Tariff Area
on payment of applicable duties.
(IBS Software Services Private Limited, Bangalore), (Alcatel Lucent India Ltd., Bangalore),
(HCL, Noida)
R3
%age limit can be enhanced R4
Yes, this makes sense.
(Infosys, Bangalore)
R5
The supplies up to 60% to DTA should be considered as compliance.
R6
All foreign exchange earnings to be considered for NFE.
14. Query
Broad-banding: Export & Trading house status
Response
R1
Similar Status may also be introduced for SME sector.
R2
Now bigger companies have these benefits. Same should be allowed to SMEs so that they get
benefits.
R3
The clubbing of turnover with parent company will help the tier II and tier III to meet their
obligations with ease.
R4
Similar provision should also be introduced for SME sector.
R5
Similar Provision for Status holder may also be introduced for SME units.
110
R6
In case, the units at Tier-1 cities offload the jobs to tier-ii and tier-iii cities.
15. Query
Broad-banding: Inclusion of DR Services
Response
R1
It is also a business model itself. But there has to be a fundamental change in the approach in the
Policy also. Business continuity and predictability is a must in service sector.
R2
Yes. The NFE should be fulfilled by the Parent company.
R3
DR SERVICES AS A PART OF IT SERVICES. Business expansion and creating Synergy within IT
Organization across world.
R4
This certainly is one area of opportunity. It should be based on the percentage of revenue accrued
towards providing DR to overseas companies or to STP/EHTP units.
R5
India should be encouraged to become the world’s DR hub. The NFE and duty free imports
allowances should be accordingly be enhanced to make the scheme more attractive.
R6
Yes. Include of Disaster recovery centers for Export & Import of goods and allowing the main Unit
to be continued by another Unit during the disaster period. The NFE should be fulfilled by the
Parent/main Company.
R7
Yes, The NFE should be fulfilled by the main company.
R8
Yes export obligation should be allowed for running/offering Disaster Recovery unit. It gives more
confidence to Global Customer. (HCL, Noida)
R9
Disaster Recovery / Business continuity services should be treated as part of the existing unit,
and the NFE should be part of the main existing unit(Sopra India Private Limited, Noida)
16. Query
Broad-banding: Inclusion of Trading and warehousing for EHTP units
1
Do you feel that trading and warehousing of electronic and hardware goods for export should
be included in the EHTP Scheme
Response
R1
Trading and warehousing of the electronic and hardware goods should be included in the EHTP
Scheme. The same will encourage investment in warehousing and will help the country.
(Amba Research India Private Limited, Bangalore)
111
R2
Yes this should be considered as this will result in creation of trading hub for the south east region
and definitely increase the foreign currency margin. (Alcatel Lucent India Limited, Bangalore)
R3
Yes, this would reduce the import/ FE outflow.
R4
Yes, it would be a one stop solution.
R5
Yes. It will help companies to build better IT incubation more economically.
R6
Indirectly this will also trigger indigenous development.
R7
The trading and warehousing need to be included in the EHTP Scheme as in the infancy stage lot
of support will be required to make the EHTP viable.
R8
Yes, trading and warehousing of electronic and hardware goods for export should be included in
the EHTP Scheme like SEZ.
R9
YES. A clear picture about the export will be found out and clients will faith upon a govt. tag.
R10
Yes. Efficient, time saving and financially viable. Away from red - Tape.
R11
Yes. This can be done within the overall DTA permission. This will allow to broadband the goods
and services. Trading may be allowed for exports.
R12
Yes it will help to generate more employment as this will attract big player to develop this
business.
R13
Yes. It will be helpful for opening new growth opportunities in the area of IT hardware development.
2
Also suggest how customs/excise procedures will be maintained in such cases
Response
R1
Customs/ excise procedures may be maintained like the provisions and procedures under SEZ.
R2
Separate bonding for the traded and manufactured goods with separate books of accounts will
make the procedure easier.
112
R3
Since similar provision is already allowed for SEZ units, the same modalities should be replicated
here also.
Separate category of licenses should be given to these units to monitor the performance of these
units. And some concessions on the same line of STP units can also be extended.
R4
Also please suggest any other services/operational activities need to be included in EHTP
Scheme
Response
R1
Embedded System, Trading Services, Repair, Recondition & Testing services should be Included.
(Confederation of Information Technology Enterprises, Bhubaneswar), (Mindfire Solutions,
Bhubaneswar)
R2
The assembling of the ckd kits should be allowed in the initial 5 years.
4
Do you feel that provision for repair, reconditioning, re-engineering of electronic products
and their export or DTA sale needs to be improved
Response
R1
By allowing the repair, reconditioning, re-engineering of the products will make the EHTP more
commercially viable and lucrative. Refurbished goods market is also a huge market and deserves
similar provisions to succeed. These services should be allowed under STP scheme at the rate of
100%.
(JSS IT Solutions Ltd, Bhubaneswar), (Enterprise System Solutions (P) Ltd, Bhubaneswar)
(Mindfire Solutions, Bhubaneswar), (Confederation of Information Technology Enterprises,
Bhubaneswar)
(Discoverture Solutions India Private Limited, Bhubaneswar), (Swaraj Enterprise Pvt. Ltd.,
Rourkela)
17. Query
DTA Sale entitlement
Response
R1
Presently, an unit can provide DTA service only in the registered service. Any related services which
can be assumed as part of the main service or in relation to the main service should also be allowed
as DTA Service. That related service may not be in IT/ITES AND ESDMsegment. Based on the
justifiability of the related service to the main service may be analyzed to grant DTA approvals.
113
R2
There should not be any limit for DTA compare to export. Domestic clients are expecting some
quality of work when they are giving a job order to an EOU. But if they are not in a position to
take up the job because of 50% limit, the clients will be forced to go to other companies which may
not fulfill their satisfaction. It does not make sense to restrict benefit only for export units. There
should be no limit in domestic sales. Indian domestic market is considerable to develop it, s/w and
h/w companies need to be encouraged.
(Aarbee Structures Pvt. Ltd. , Bangalore), (Evalueshops.Com Pvt. Ltd., Bangalore)
(Erevmax Technologies Pvt. Ltd, Kolkata), (Enterprise System Solutions (P) Ltd,
Bhubaneswar)
(Mindfire Solutions, Bhubaneswar), (TATWA Technologies Ltd, Bhubaneswar)
(Aabsys, Bhubaneswar), (RMSI Pvt Ltd, Noida), (HCL, Noida)
R3
STP/EHTP Units may be allowed to sell goods in DTA without approval from Central Excise to the
extent of 50% of FOB value approved by STPI on payment of applicable duty
(Vxl Instruments Ltd., Bangalore)
R4
50% is good enough. The purpose of being an EOU will get dissolved if we further increase the DTA
entitlement.
R5
Looking at the present trend and to overcome the swings in IT & ITeS market, 60% allowance will
be advisable.
R6
Would be good if the limit is enhanced, may be 80-100% or more if possible considering the growth
of domestic demand.
R7
To go beyond 50% limit in one year but not over a block period of 5 years.
Infosys Limited, Bhubaneswar)
18. Query
DTA sale entitlement in case of EHTP units
Response
R8
Same provision for both STP and EHTP units. There should be no limit for DTA sales for EHTP since
such provision would reduce the import/ FE outflow.
(Evalueshops.Com Pvt. Ltd., Bangalore), (Infosys Ltd, Bangalore)
(Luminous Infoways Pvt. Ltd., Bhubaneswar), (Aabsys, Bhubaneswar)
(Ardee Business Software Solutions, Rourkela), (Business & Decision GDC Pvt ltd, Noida)
R9
Yes. It will be helpful for development of IT infrastructure cost and reduction of imports. Such sale
made in DTA can be considered for NFE purpose as exports.
114
R10
Yes can be as market scope is more.
Yes the DTA sale entitlement should be 60% or more for EHTP as these schemes will take time to get settled.
19. Query
Relaxation for R& D units
Response
R1
Units engaged in R&D activity should benefit to the extent of the amount spent by them in such
activity
(Evalueshops.Com Pvt. Ltd., Bangalore)
R2
Yes, provided the R&D is material for business and not for tax relief.
R3
Yes, even they should be given grants on case by case basis.
(Erevmax Technologies Pvt. Ltd, Kolkata)
R4
The NFE and DTA sales entitlement should be relaxed.
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (Aabsys, Bhubaneswar)
(Raconsys Consultancy Services Pvt.Ltd, Bhubaneswar), (Mindfire Solutions, Bhubaneswar)
R5
Yes, should give some incentives.
R6
Yes, monetary benefits and subsidy for usage in energy and manpower would be helpful.
R7
For the R & D based STP/EHTP the norms advisable should be around 70%.
R8
IT Units should be encouraged to R&D projects. STP/EHTP units engaged in R& D activities should
be permitted to meet the NFE/Export Obligation within maximum period of 10-15 years.
R9
Provision of proper infrastructure. Financial assistance. Tax relaxation.
R10
Yes. As much as possible as R & D return is very long term. (Best Coder Software Pvt Ltd,
Patna)
R11
Yes, there should be relaxation for the units engaged in R & D activities as per the projects proposal
and duration involved.
R12
FTP and HBOP policy should be applicable to R & D activities too.
Longer tax exemption period.
(HCL, Noida)
115
R13
Yes it should be given more relaxation and then only it can enhance its real scope and emerge
innovative ideas from talented work force.
20. Query
Work from home
R1
The authorized employees if STP/EHTP units should be permitted to work from home through
internet connectivity. This improves productivity and quality of life for employees. As long as
the STP units provide the equipment and take care of data security, this should be fine. This is a
perfect suggestion to get more flexibility to talented employees, companies will be able to obtain
their service and it will be cost effective for them in a way that they need less infrastructure at
their facility.
(FusionCharts Technologies LLP, Kolkata), (Acclaris Business Solutions Pvt. Ltd., Kolkata)
(NIIT Technologies Ltd, Kolkata), (Systems Technology International, Bhubaneswar)
(Raconsys Consultancy Services Pvt.Ltd, Bhubaneswar), (Enterprise System Solutions (P)
Ltd, Bhubaneswar),
(Mindfire Solutions, Bhubaneswar), (M/s PHP Workshop, Nagpur)
(Suyog Computech (P) Limited, Bhubaneswar), (Discoverture Solutions India Private
Limited, Bhubaneswar),
(Aabsys, Bhubaneswar), (Business & Decision GDC Pvt ltd, Noida)
(Maxval Technologies Pvt Ltd, Navi Mumbai), (Prothious Engineering Services P. Ltd., Navi
Mumbai)
(Qualex Systems Pvt Ltd, Pune), (Cummins Research & Technology Ind Ltd, Pune)
R2
Yes work from home should be extended and permitted specially for the lady employees and other
employees who are required to travel long distances.
R3
STP/EHTP units should be allowed their employees who may access through communication links
to work from home/ anywhere/ outside the authorized STP/EHTP unit premises.
R4
Employees belonging to the strategic group and revenue group should be given the extension
facility so that Companies will get benefited by this. It also builds in loyalty and employee benefit.
Those who are working with foreign customers with different time zones can avail this extended
facility to appear on-line conferences and closing deals.
R5
STP/EHTP units may be allowed off-site employees who may access facility installed in STP/EHTP
unit through communication links to work from home/ anywhere/ outside the authorized STP/
EHTP unit premises provided the resultant exports take place only from premises of the STP/EHTP
unit.
116
R6
YES. Guidelines should be prepared by the member unit depending their employee’s strength and
feasibility.
R7
Yes but only for productive resource who can work independently. Effecting tracking software
needed.
R8
Yes. Privacy & confidentiality agreement should be in place.
R9
Due to various security risks / challanges, work from home, should be decided by individual
company. A common guidelines will not help and will complicate the matter.
R10
Work from home should be allowed wherein the work involved does not involve too much
dependence on IT infrastructure. Not only does such a provision gives independence to individual
but it also reduces the CTC cost to the company. The individual too saves time and money on
commuting. Specially in overseas projects where online interaction is involved with the client and
(RMSI Pvt Ltd, Noida)
there is a time zone difference, work from home should be allowed. R11
It can be tried but we need stringent check on such entities.
R12
Yes, work from home should be permitted to the employees of STP units as these would provide
more flexibility to employees and hence would be more helpful to attract talent. Also, to align
ourselves with global policies as globally this is allowed.
21. Query
NFE calculation
Response
R1
Cumulative calculation is a good process.
R2
While calculating forex outflow the value of imports for which payments have been made in
Indian Rupees under High Sea Sales transactions should not be left out. (RMSI Pvt Ltd, Noida)
R3
NFE calculation shall be cumulative of all STP/HTP units.
Query
Manpower Development
Do you feel that STP/EHTP units can contribute towards manpower development for IT/ITES
AND ESDM? If so how?
Response
R1
Certification of trained personnel for recognition by STPI(Evalueshops.Com Pvt. Ltd.,Bangalore)
117
R2
By providing relevant job oriented training which is becoming a burden on the employer. Also, this
will negate any flaws in our education system.
R3
Imparting industry relevant training and being the single agency with respect to maintaining of
records of National skill registry. (Kodiak Networks (India) Private Limited, Bangalore)
R4
Creating a strong Industry-Academia-Govt. financially independent Forum. Training at lease 25% of
the Graduates produced at State Level. ( Infosys, Bangalore), (Infosys Limited, Bhubaneswar)
R5
Yes, it can. This can be achieved by attracting GOOD Business schools, engineering colleges and
other training institutes to co locate around STPI / EHTP.
R6
Yes, by providing short term and long term training programs and conducting varius seminars.
STP/EHTP are good training ground for manpower development.
(NIIT Technologies Ltd, Kolkata), (Suyog Computech (P) Limited, Bhubaneswar)
(AuroIN India Ltd., Bhubaneswar), (ProcessMAP Infotech Pvt.Ltd., Bhubaneswar)
(Swaraj Enterprise Pvt. Ltd., Rourkela), (NathCorp Pvt. Ltd., Ranchi)
(iT Gurus Software, Navi Mumbai), (TATWA Technologies Ltd, Bhubaneswar)
R7
Yes, With Industry academia collaboration.
R8
Yes. The quality of manpower coming out of most of the colleges is pathetic. It is the industry, the
units, which adds talent to these individuals through employment.
R9
Some type of Finishing School concept should be introduced that attempts to make up for
deficiencies of colleges by providing specialized vocational training in technical fields such as
computer programming and information technology enhancing the soft skill of students and
professional to make them employable.
R10
STPI should help design latest curriculum as per industry requirement and provide training in
collaboration with STP/EHTP units.
(PHP Workshop, Nagpur), (Aabsys, Bhubaneswar)
R11
Yes. By Providing Platform, Infrastructure and making industry leader and share and train future
manpower.
R12
Custom/Excise duty Benefit given to STPI unit for Training to its manpower could lead to upgrade
technical expertise. (HCL, Noida)
118
R13
Yes, By encouraging the IT/ITES AND ESDMAND ESDM industry, need for good / trained manpower
will be required, which can further be developed in Good software engineer development pool.
R14
Yes. EHTP units provide employment opportunities to skilled technical persons.
R15
Yes. Growth in STP units will lead to creation of jobs and growth in technology with help in
development of manpower.
R16
Yes as lot of institutions is adding skilled and talented manpower every year and supply will keep
pressures and best schemes like this will help to grow them and make use of their knowledge and
skills.
23. Query
Institutionalizing the manpower development activities of IT/ITES AND ESDMAND ESDM/
Hardware training houses/industry
Response
R1
An accreditation mechanism can be introduced by STPI for institutionalizing the manpower
development activities of IT/ITES AND ESDMAND ESDM/Hardware training houses/industry because
STPI is well aware about the current trend & technology which are required for IT Industries and
global market. Such move would definitely helpful in creation quality Manpower in specified field
with domain expertise. Accreditation will certainly enhance the credibility of the trainees.
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (JSS IT Solutions Ltd, Bhubaneswar)
(Aabsys, Bhubaneswar), (Ardee Business Software Solutions, Rourkela)
(Swaraj Enterprise Pvt. Ltd., Rourkela), (HCL, Noida)
(Sopra India Private Limited, Noida), (Prothious Engineering Services P. Ltd., Navi Mumbai)
24. Query
Ways to foster active collaboration between STP/EHTP units and Universities/Academia/
High end Training Institutes to further expand the available world class talent pool in the
country.
Response
R1
Create a Financial Independent Forum:- > With a clear mandate to achieve 25% technical training
and finishing school for all the graduates getting produced by the state. > Contribution can be
taken from Industry on Recruitment to sustain financially > Change the head of this forum every
4 years and bring in Industry/Academia expert to head on remuneration basis( It can be done socio
-business model)
119
R2
More joint programs involving students is required.
R3
Yes. STP/EHTP units should reach out to the Universities/Academia/High end Training Institutes.
(NIIT Technologies Ltd, Kolkata)
R4
Work oriented syllabus can be introduced in universities.
(Systems Technology International, Bhubaneswar)
R5
The collaboration should be in the field of innovation and incubation to produce talent pool as per
industry need as well as third generation entrepreneur.
R6
By setting up of Incubation & specialized Training Program.
R7
Companies can hire trained professionals through STPI.
R8
Organizing Job Fairs. Introducing Industry specific training classes and courses in colleges. So that freshly
passed out students will have quick access to job. This will also enhance employability index of students.
R9
Internship - talent search competitions - contribution to faculty - Innovation recognitions.
R10
For manpower training collaborative courses should be introduced to make them more attractive.
R11
Proper synergy between Industry and academia should be created so that the pass out students
could be groomed to meet industry requirements time to cut down the “deployable time” for a
company. to enhance skills both technical and soft skills of young graduates to facilitate their
employability and with specific areas of focus in Skill Development.
R12
To provide more facilities so that the manpower flow can be more refined.
R13
The collaboration should be in the field of innovation and incubation to produce talent.
6+5(Raconsys Consultancy Services Pvt. Ltd, Bhubaneswar)
R14
In Preparing Syllabus, Through Train the Teacher Program through Industry.
R15
It should be industry vs. personnel friendly and STPI should assume powers to mediate.
R16
Connect STP Units to Universities and Have them Build talent during break for future manpower
needs.
120
R17
It is needed at all levels. A clearly policy in these needs to be drafted. The opportunity should be
such that, the capable people get the scope to work on it.
R18
Universities/Academia/High end Training Institutes should be encouraged by STP/EHTP by creating
awareness about you.
R19
Specialized vocational course can be introduced that can make the graduates employable and
productive quicker for companies hiring them.
R20
Putting more practical oriented subjects in academic studies and marketing it throughout the world
to attract more talented work force to grow India.
R21
STPI can share the development/growth plans in Tier II/III cities and areas of specialization needed
by such companies.
25. Query
Market Assistance & Patenting
Do you think Govt. can extend market assistance to STP/EHTP units. If so how?
Response
R1
Yes. By organizing fairs which can work as a common forum for many organization to share their
views and ideas for enhancement of business synergy.
R2
Absolutely. By trade shows, reimbursing registration and travel costs, etc.
R3
The MDA should be extended to STP/EHTP not only to organize road shows to attract clients but
also to open common representative offices overseas as the front office of the SME’s who would
not have been able to open such offices.
R4
Marketing, a strategic tool for business development, is critical for the growth and survival of micro, small
& medium enterprises. Marketing is the most important factor for the success of any enterprise. Large
enterprises have enough resources at their command to hire manpower to take care of marketing of their
products and services. MSME sector does not have these resources at their command and thus needs
institutional support from organization like STPI for providing these inputs in the area of marketing.
R5
By conducting international and national level forums and exhibitions.
R6
Govt. can fruitfully use its huge contacts globally and suggest to registered units by wage of
bulletins/circulars availability of market. It will be beneficial for Tier II & III cities units.
121
R7
Making more simple but effective policies thereby giving credit to right business to grow healthily.
R8
Govt. can work in this area for facilitating the infrastructure on the same lines of M. I.D.C.
R9
Govt. should promote smaller unit so that industry can grow as a whole.
R10
Yes, depend upon the city & entrepreneur standard, STP should extend marketing assistance
through professionals.
(SeeNet Consultancy Services Pvt. Ltd, Rourkela), (Hi Technology & Services, Rourkela)
R11
Yes, like export council, STP should introduce market assistance.
R12
Yes, it is essential for growth and sustenance of SMEs.
(Mindfire Solutions, Bhubaneswar), (Aabsys, Bhubaneswar)
26. Query
Patenting support from STPI
Response
R1
If there is an STPI entity which can do patent searches/ training on patentability for free many
companies would increase their efforts in this area (Alethea Communications Technologies PVT
LTD, Bangalore)
R2
Yes, it will help building IP. STPI can assist in submission of application for Patent and facilitates
to get Patent. Further, Patents should be allowed for software developed in India.
(FusionCharts Technologies LLP, Kolkata)
R3
From bringing awareness to facilitating it.
(Erevmax Technologies Pvt. Ltd, Kolkata), (iT Gurus Software, Navi Mumbai)
R4
Mechanism should be introduced for patenting of the product of the IT Companies.
R5
STPI should introduce a system for patenting of product of SME STP units.
(Mindfire Solutions, Bhubaneswar), (Aabsys, Bhubaneswar)
R6
Yes. Applying, obtaining patents, cost reimbursements.
R7
Yes, STP/EHTP need patenting more so for the R & D based STP’s /EHTP’s. There need to be single
widow assistance by the STPI.
122
R8
Lots of IT SMEs have created innovative products but due to absence of patenting mechanism
there are copyright issues. So it is time to introduce some patenting mechanism to boost the
development of product by SMEs.
R9
By pursuing patenting authentic for prompt registration of patents.
R10
Depend upon the requirement, patenting support is required.
R11
YES. In collaboration with Patent authority of India.
R12
Yes, patenting laws can be made user friendly. (Sopra India Private Limited, Noida)
Yes.by strong policies and support.
R13
Would be good if STP can provide this support. It can have guidelines and trained personnel for
guidance and execution of patent process.
R14
STPI should provide information of the all required relaxation on MOM or QOQ basis to STPI unit.
R15
27. Query
(DigIndia Technologies Private Limited, Nagpur)
Does STP/EHTP need any support for ICT adoption
Response
R1
Yes, the IT Industries particularly SME sector depends for ICT adoption. Since it is capital intensive,
Govt. through STPI should support for ICT adoption on sharable basis.
(Mindfire Solutions, Bhubaneswar), (NathCorp Pvt. Ltd., Ranchi)
R2
Yes. ICT Policy has lots of benefits for STP units. However awareness needs to be created which will
be helpful for STP units for a ailment of the benefits. New ICT Policy to be uploaded at a common
forum where all STP units will have access to it.
R3
There should be developed a model ICT policy by STPI for the state governments as recommendatory
so that there is uniformity in the State and centre ICT policies.
R4
Providing the financial assistance with subsidies and incentive and infrastructure development.
R7
Need to understand present system.
123
28. Query
The Powers and functions of Jurisdictional Director of STPI are specified as per Para 6.32 of
Hand Book of Procedure, FTP. If you feel that any changes in power/function should be made to
further boost the implementation of STP/EHTP Scheme, speedy development of Infrastructure
Service Provider (ISP) /IT Park and promotion of exports there from. Please suggest
Response
R1
STPI Jurisdictional directors should update themselves with the ongoing market demands and
economic situation. They should be given adequate power of approval to speed up the process. The
experience so far has been that there is minimal coordination between Govt. Departments which
creates bottleneck for industry to grow speedily.
R2
While STPI working on behalf of the Central Excise, STPI should be given ultimate power to act
independently.
R3
The Powers of Jurisdictional Director of STPI should be similar with Development Commissioner of
SEZ. Power should also be vested for State subject like Entry Tax, Labor, and Electrical Inspection
issues.
R4
The power of STPI should be the same like SEZ.
(AuroIN India Ltd., Bhubaneswar), (Noratel India Power Components Pvt Ltd,
Thiruvananthapuram)
R5
The STPI director works closer than most government bodies with the units. They foster the units
and work towards their health. Any matters, especially the taxation related matters, it would help
to have one single point of contact and approval, which could be STPI director. He / She should
have jurisdiction and final say in all regulatory matters pertaining to the unit.
R6
Especially for the creation of more Infrastructure Service Providers (ISP)/IT Parks more decentralized
powers for both approval as well as renewals should be given to state heads so that more
entrepreneurs are encouraged to create/build more IT infrastructure.
R7
By reducing the document processing process for approval. Providing independent power to
directors of STPI heading individual units. They should have some independent power to take
action without taking a lengthy process for permission.
29. Query
124
Adjudicating Authority
1
I) In respect of STPs/ EHTPs, the Jurisdictional Director, Software Technology Parks of India
have been duly authorized by Central Government for the purpose of exercising powers under
Section 13 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) for
adjudication
Response
STPI should work independently like Single Window. The Jurisdictional Director, Software
Technology Parks of India may be authorized to exercise powers. It should be more simple, faster
and transparent.
(NIIT Technologies Ltd, Kolkata), (Discoverture Solutions India Private Limited,
Bhubaneswar)
(NathCorp Pvt. Ltd., Ranchi), (HCL, Noida)
(Aabsys, Bhubaneswar), (Prothious Engineering Services P. Ltd., Navi Mumbai)
2
STPI as adjudicating authority for export certification
Response
R1
Yes, The same should be discussed with RBI and the same has to be accepted by the other authorities
like state/central authority. This will help speed up the process.
(Infosys, Bangalore), (Acclaris Business Solutions Pvt. Ltd., Kolkata)
(IBS Software Services Private Limited, Bangalore)
(AuroIN India Ltd., Bhubaneswar), (JSS IT Solutions Ltd, Bhubaneswar)
(Infosys Limited, Bhubaneswar), (NathCorp Pvt. Ltd., Ranchi)
(HCL, Noida), (Prothious Engineering Services P. Ltd., Navi Mumbai)
R2
Power should be given to Director, STPI for conditioning the delay for late submission of Softex,
remittance of FE, allowing enhance & decrease of export invoices etc.
3
Changes in Import/Procurement Rules & Guidelines
Response
Procurement documentation to be made common across all the states and cities.
(First American (India) Private Limited, Bangalore)
R1
As per 52/2003 dated: 31-03-2003 Aneuxure-1(Sl No: 12)- A Prototype or a technical sample for
each of the existing products for the purpose of product diversification, development or evaluation
Modification Required: Prototypes and technical samples for existing/upcoming / future product(s)
and product diversification development or evaluation 2.As per 52/2003 dated: 31-03-2003
Aneuxure-1(Sl No: 14)- Goods re-imported within three years from the date of exportation for repair
or reconditioning Modification Required: Finished goods re-imported for repair or reconditioning
without any time limit (Schneider Electric IT Business India Pvt Ltd, Bangalore)
125
R2
Like a single window STPI should issue Procurement Certificate as well as CT3.
R3
It should be more simplified & Self certification should be allowed.
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (TATWA Technologies Ltd,
Bhubaneswar)
(AuroIN India Ltd., Bhubaneswar), (Raconsys Consultancy Services Pvt. Ltd., Bhubaneswar)
(Aabsys, Bhubaneswar),
R4
Now the Import process follows with lots of procedural issues. The unit first applies for Import
Certificate and based on that Procurement Certificate is issued by the Customs which are timing
consuming and duplication of procedures. Hence the requirement of Procurement Certificate should
be dispensed with. The unit should be allowed import based on Import Certificate from STPI.
R5
Relieving from obtaining individual Procurement /CT-3 Certificate for claiming Custom/Excise Duty
exemption. Custom/Excise Duty exemption should be pass on to STPI/EOU units upon producing of
valid Letter of permission and Custom Bonding license u/s 58 of Custom Act instead of obtaining
(HCL, Noida)
individual approval transaction-wise. R6
Procurement of diesel without payment of taxes and duties shold be allowed from petrol stations
instead oil depots. Because oil depots are not available everywhere and secondly small quantities
cannot be procured from them whereas large quantities cannot be stored as per building byelaws.
4
Any changes in Operational guidelines
Response
R1
If the process can be eased for sending back materials to its original manufacturer due to bad
quality / repairs, that will be good. ( Acclaris Business Solutions Pvt. Ltd., Kolkata)
R2
Online application and approval mechanism will reduce hassle for companies.
(Erevmax Technologies Pvt. Ltd, Kolkata)
R3
Simplified to make it easy. Less paper work. More on self declaration.
R4
Self declaration should be introduced.
R5
More and more Self declaration & Self certification mechanism may be introduced for Import/
Customs & Excise Procedures & guidelines.
R6
Self Declaration concept should be followed.
126
R7
Awareness amongst custom employees by way of training to handle such requirements is
essential.
R8
Dual permission - STPI & Customs need to be eliminated and simplified.
30. Query
Incentives to STP/EHTP units
Response
R1
Re-introduction of income tax holiday for the STP units on same lines as is available to SEZ Units.
In addition, introduction of upfront service tax exemption for services being utilized by STP Units
in relation to export of output services. Introduction of CENVAT credit for rent-a-cab, outdoor
catering, life insurance, event management etc.
(Colt Technology Services India Pvt Ltd, Bangalore), (NIIT Technologies Ltd, Kolkata)
R2
Tax benefits like: 100% exemption from Income Tax on export income; exemption from Service
Tax, Goods and Sales Tax/VAT, Octroi and all other local taxes and duties.
R3
Incentive for startup ventures should be provided to encourage entrepreneurship.
R4
Income Tax exemption, quality certification, training, etc.
R5
Incentives for 1. Marketing assistance 2. Creating employment 3.R&D facilities 4.Creating
Infrastructure 5.Domestic business 6.Innovation.
R6
More thrust should be given on facilities than benefit.
R7
IT benefits, MDA benefits, quality certification, training of professionals. subsidiary for participation
in international forum.
R8
Tax holiday to be extended to STP/EHTP units operating in tier II and tier III cities. These compete
against those in tier I cities which automatically have advantages in the areas of man power,
infrastructure, etc to bring employment to Tier II and Tier III cities. Their efforts need be incentivized
to compensate for their disadvantageous position.
R9
Income exemption under Infrastructure u/s 80IA should be available for STP/EHTP Infrastructure
Service Providers.
127
R10
Yes. Its should be linked to employment and Investment. To provide 50% of the Income Tax/DDT as
refund for the expanding operation at tier-II & III cities. 100% for SME having a export less than
5-10 MN USD.
R11
Income Tax exemptions on Export profit are essential.
R12
The Income Tax exemption which was a prime requirement for IT Industries to be cost competitiveness
should be restored for STP/EHTP units in line with SEZ.
R13
Income Tax exemption.
(ProcessMAP Infotech Pvt.Ltd., Bhubaneswar), (Aabsys, Bhubaneswar)
R14
It should be handled flawlessly.
R15
Provide tax benefits to new units being set up in STP/ HTP. 2. Clarity and transparency in tax
system, undue litigation under Transfer Pricing Policy. 3. Remove MAT (Minimum alternative Tax).
4. Provide service tax benefits, (exemption at the time of availing services), rather than taking
refund. 5. Infrastructure development, lessor power cuts, roads, etc 6. No amendments may be
made which are retrospective in nature. R16
Need to reintroduce income tax benefits.
Restoration of Section 10A of Income Tax Act, 1961.
(ECI Telecom India Pvt Ltd, Navi Mumbai)
All indirect tax benefits need to be given without longer procedures and time consuming
documentations.It can really work if it comes based on registration criteria directly.
R17
R18
1. Income Tax incentives on STPI units should not be totally withdrawn. STPI units should have
to pay discounted Income tax of say 10% maximum instead of current 30%. STPI units provide
Jobs and Employees also pay income tax so IT units specially Small IT units having turnover of
say up to 5 Crores should have to pay discounted Income tax rates. 2. In IT, Employees resign
frequently and there are high attrition rates. Considering these, Labor laws like condition
of EPF should be relaxed. Currently even if employees don’t want to deduct their EPF, we have
to deduct EPF as per the government rules. Dealing with EPF department is a big trouble.
(M/s PHP Workshop, Nagpur)
With the withdrawal of Income tax benefit for STP/EHTP schemes, this scheme is not very much a
lucrative for new units for set up.
R19
31. Query
Reimbursement of Central Sales Tax (CST) for STP/EHTP units
Response
128
R1
The CST reimbursement on supplies from DTA to STP/EHTP may be allowed when the supplies are
utilized by the units for and in relation to production of goods/services
(Flowserve India Controls Private Limited, Bangalore)
R2
Items used in relation to software export should be included. All the items used for the creating
infrastructure and for the export of software should be allowed( except items and goods used for
the consumption of employee or welfare of employee of the organization
R3
All types of goods like import should come under the purview of CST exemption.
R4
Work stations. Software and
R5
Items like construction materials, electrical, elevators and plant machinery may be included.
licenses
used
for
production
of
IT
services.
R6
All goods required for IT should be permitted.
R7
The CST reimbursement should be applicable for all items which are allowed for Import and
domestic procurement.
R8
All type of goods import should be under view of CST exemption
(Raconsys Consultancy Services Pvt. Ltd, Bhubaneswar), (Aabsys, Bhubaneswar)
R9
CST and Service Tax Reimbursement process should be easy, and within fixed time.
(White Tiger Errand Technologies Private Limited, Ranchi), (M/s PHP Workshop, Nagpur)
R10
Instead of Claiming CST reimbursement it may be exempted to all STPI/EHTP/EOU unit as applicable
in SEZ.
(HCL, Noida), (RMSI Pvt Ltd, Noida), (Discoverture Solutions India Private Limited,
Bhubaneswar)
(Prothious Engineering Services P. Ltd., Navi Mumbai), (Noratel India Power Components
Pvt Ltd, Thiruvananthapuram)
32. Query
Deemed export benefits
Response
R1
Yes, procedure has to be made simple.
(Infosys Limited, Bhubaneswar), (AuroIN India Ltd., Bhubaneswar)
129
33. Query
Duty incentives for training purpose
Use of duty free Computers in STP/EHTP for training purpose is also allowed as per Para no
6.19.3 of Hand Book of Procedure, FTP . Do you feel other duty free items are required for
Training Purposes? If yes Please specify.
Response
R1
Use of all duty free equipment in STP/EHTP for training purpose may be allowed subject to the
condition that no duty free equipment will be installed outside the STP/EHTP unit.
(IBS Software, Bangalore)
R2
Items like networking and communications are also required for training purposes.
R3
The facilities should be open for exports, domestic as well as training purposes.
R4
Training is required to be given creating work environment. Hence duty free items for training also
are required.
Yes. ITES industries who are involved in providing analysis services needs equipments for training.
R5
R6
Projectors, printers, Xerox machines could be included.
R7
Software, Audio visual equipment, VOIP phones, video conferencing equipment.
R8
Software, Work stations.
R9
Consultancy charges paid to foreign trainers, travel expenses need to be included.
R10
Networking is required.
(Raconsys Consultancy Services Pvt. Ltd)
34. Query
Depreciation norms for Duty free goods
As per As per 6.35.1 of Hand Book of Procedure, FTP Depreciation up to 100% is permissible
for Computers and Computer peripherals in 5 years and 10 years in case of other items. Do you
suggest any change in the existing provision.
Response
130
R1
All IT products like switches, routers, Servers, networking, telecom items should qualify for 100%
Depreciation in five years.
(Accenture, Bangalore), (IBS Software Services Private Limited, Thiruvananthapuram)
(NIIT Technologies Ltd, Kolkata),
R2
It should be reduced to 3 years for both since computer equipments go obsolete within 3 years.
(Electronics for Imaging India Pvt Ltd, Bangalore)
R3
Permitting 100% depreciation in 3 years on Computer/ Computer Peripherals and 5 years in case of
other items.
(SAP Labs India Pvt Ltd, Bangalore), (Aabsys, Bhubaneswar)
(Raconsys Consultancy Services Pvt. Ltd, Bhubaneswar)
(Colt Technology Services India Pvt Ltd, Bangalore)
(Infosys, Bangalore)
R4
10 years for other items should be reduced to 7 years.
R5
5 years can be reduced to 3 years as with such a fast world of IT, a system becomes obsolete in every
three years. similarly for other it should reduce to 4 years.(AuroIN India Ltd., Bhubaneswar)
R6
The allowance should be increased to 150% as an incentive.
(JSS IT Solutions Ltd, Bhubaneswar )
R7
10 years for other items should be reduced to 7 years.
R8
3 years for Computer Items & 4 years for non computing items.
R9
Life cycle of other than computer peripherals is very huge i.e. Battery of UPS and Air conditioners
life cycle comes in 10 year slab which is more than its actual life. In this way, STPI units are bound
( HCL, Noida)
to keep scrap up to 10 years.
R10
The normal life of a computer is 3 years considering the rapid changes in technology. 100%
depreciation should be allowed in 3 years instead of 5 years. Similarly there are a lot other
items other than computer and computer peripherals where a faster rate of depreciation should
be allowed. For e.g UPS batteries, carpets, photocopier machines, video conferencing equipment,
furniture, etc.
Yes, depreciation for all equipments should be reduced to 3 years because technological upgrades
happen very frequently.
R11
R12
No changes required.
131
35. Query
Venture Funding
Do you feel Government should support Financial Institutions (FIs) evolving dynamic norms for
risk financing and Venture Capital. If yes please suggest the concept or any model being followed
in other sector.
Response
R1
Yes, modalities like SIDBI may be followed.
R2
It is very much essential to promote IT business. Lets STP be the part of process like certifying the
business, mentoring and monitoring.
R3
Govt. should look forward to have this done, in any form that brings a win-win situation.
R4
Yes. Venture capital is a good way of funding IT companies without any collateral security.
R5
Government should allow as well as float specific venture funds for this sector with addition
Income Tax benefits.
R6
Yes, in line with National Venture Fund For Software and IT Industry (NFSIT)which has been set
up by SIDBI and is being managed by SIDBI Venture Capital Ltd.
R7
Support by FIs is needed. Modality to be decided by the Govt. & FIs jointly.
Yes professional consultants help will create more good system.
R8
36. Query
Validity of LOP
The Letter of Permission (LoP) of STP/EHTP unit is valid for three years by which time unit
should have commenced production. Its validity may be extended further up to 3 years by
Jurisdictional Director, STPI. Once unit commences production or service LoP issued shall be
valid for a period of 5 years for its activities.
Do you feel the above provision is sufficient?
Response
R1
The limit of LoP validity should be removed. The better provision will be to withdraw LoP in case the
Unit doesn’t comply with the requirement (Amba Research India Private Limited, Bangalore)
The validity should be extended to 8 years. ( Electronics for Imaging India Pvt Ltd, Bangalore)
132
R2
The LOP is the basis for other registrations and certifications such as EXIM card/no. Every time the
LOP expires we end up having to renew a whole bunch of things. While the renewal of LOP itself is
smooth thanks to STPI’s efficient processing, we face issues with other departments. It would be
nice to have a longer Lop for companies that the STPI director is confident of.
R3
The validity of LOP should be 5 year on first approval and thereafter it should be automatic
renewal for 5 years block until revoked.
(JSS IT Solutions Ltd., Bhubaneswar)
R4
2 more years should be added for present scenario.
R5
Validity of LOP should be increased from 5 years to 10 years.
(First American (India) Private Limited, Bangalore),
(Morgan Stanley Advantage Services Pvt. Ltd., Navi Mumbai), (NathCorp Pvt. Ltd., Ranchi )
R6
Automatic renewal based on the past performance of the Unit may be granted without putting up
the application by the STPI Unit.
(Cognizant Technology Solutions India Pvt Limited, Pune)
37. Query
Distinct identity of STP/EHTP units
If an industrial enterprise is operating both as a Domestic unit as well as an EHTP/STP unit, what
should be maintained for ensuring two distinct identities?
Response
R1
Separate books o accounts should be maintained for both the activities as separate units
and merged at year end, separate bank accounts should also be maintained for both.
(JSS IT Solutions Ltd, Bhubaneswar), (Amba Research India Private Limited, Bangalore)
(Colt Technology Services India Pvt Ltd, Bangalore), (Confederation of Indian Industries,
Bhubaneswar)
R2
Since both exports & domestic should be allowed, the details should be reflected in Balance Sheet/
Turnover only.
R3
Two units should be managed by a different set of peoples, even if they are the employees of the
same organization.
R4
Simple rules to bifurcate the Export and Domestic turnover, expenses and income.
R5
A standard emboss logo of STPI on all the documentations.
133
R6
It should be considered as two different units. (Cummins Research & Technology Ind Ltd, Pune)
R7
Should be one and no need to differentiate.
(Erevmax Technologies Pvt. Ltd, Kolkata), (Enterprise System Solutions (P) Ltd,
Bhubaneswar)
(Raconsys Consultancy Services Pvt. Ltd., Bhubaneswar), (Hi Technology & Services,
Rourkela)
38. Query
Bonded Area
Response
R1
Bonding area definition or changing procedures should be made easier
R2
(Electronics for Imaging India Pvt Ltd, Bangalore)
The depreciated items should be removed from bonding.
R3
The concept of bonded area makes sense to me. Applying and getting a Custom bonded area can be made
simple. It takes a long time. Also the timelines for rewarehousing of the goods may be relaxed a little.
R4
No separate Bonding is required like SEZ.
(Raconsys Consultancy Services Pvt.Ltd Bhubaneswar), (Enterprise System Solutions (P)
Ltd, Bhubaneswar)
R5
Yes, without going for an additional Bonding, the provision made under SEZ should be replicated
where the Bonding could be done automatically with execution of Letter of Undertaking.
R6
Changes to be done by giving exemption in custom bonding license to the units who are not
entitled for any exemption on imports.
R7
It should be integral part of STPI & STPI should be empowered for identifying bonded area since
they have expertise for the purpose.
R8
There should be no need for elaborate procedure for bonding of area where software development is taking
place. If there are no items imported as duty free from customs, the bonding should not be mandatory.
(Maxval Technologies Pvt Ltd, Navi Mumbai)
R9
If Duty free facility is not availed, then the Unit should not be bonded.
(Xoriant Solutions Private Limited, Navi Mumbai)
134
R10
Yes bonded license can come to give more direct benefits and can be given permission for similar
period like 5 years.
R11
The radius should be 30 to 35 km instead 25 km.
R12
If possible, consider removing the requirement of having a bonded-warehouse for being an STP
unit, at-least for those who do not import much.
39. Query
Soft bonding
Response
R1
Soft Bonding with Self Regulatory Mechanism should be adequate. (Evalueshops.Com Pvt. Ltd.,
Bangalore)
R2
Soft bonding based on self-declaration may be allowed instead of existing Physical Bonding
making STP /EHTP operation simple and hassles free. ( Amba Research India Private Limited,
Bangalore)
R3
Self bonding will reduce the transaction time significantly. ( Colt Technology Services India Pvt
Ltd, Bangalore)
R4
Soft bonding in electronic format backed by physical records will definitely reduce the hassles.
R5
Based on some kind of Self declaration basis.
R6
The Concept of Soft Bonding should be some kind of logical Bonding based on self declaration.
(Confederation of Information Technology Enterprises, Bhubaneswar), (Enterprise System
Solutions (P) Ltd, Bhubaneswar)
(AuroIN India Ltd., Bhubaneswar), (Raconsys Consultancy Services Pvt. Ltd., Bhubaneswar),
R7
Yes. Modalities to be decided by the Govt.
R8
“Soft Bonding” based on self-declaration may be allowed instead of existing Physical Bonding
making STP /EHTP operation simple and hassles free. (HCL, Noida)
R9
Yes any system being operated online without interfering of manpower will work faster and
longer.
R10
Yes, soft bonding instead of physical bonding would be more prudent.
135
R11
After moving to Central excise purview, it is very tedious process to get the bonding of the equipments.
Every consignment requires to be verified by the Central Excise officer before release to the users.
40. Query
Export Certification (Softex) & Foreign Exchange Remittances
Response
R1
Softex monthly return to be made online across all locations including Tier-II/Tier-III cities. Network
of authentication between RBI,AD& STPI units to be formulated. ( First American (India) Private
Limited, Bangalore)
R2
Softex requirement should be above 100000 USD single Invoice.
R3
The timeline for submission of softex should be enhanced and declaration should be based on self
certification.
R4
The procedure of certification should be based on the bank accounts and certification from the
bank for the foreign remittances along with CA certification, this will reduce lead time.
R5
Implementation of Instruction of 80/ 15th Feb 2012. Making a online submission portal
linking AD-RBI. Onsite portion of the export to be captured as part of the report ( Invoice line
level details) separately. Approving Total Export (Offshore + Onsite) for the other compliance.
R6
The Softex procedure should be simplified. The Revised Softex procedures adopted by RBI recently
should also be applicable for SME IT units.
R7
The timing of softex must be enhanced and declaration should be based on self certification
(Raconsys Consultancy Services Pvt. Ltd., Bhubaneswar)
R8
It should be more simplified based on Self declaration basis.
R9
Limit should be enhanced.
R10
It should be auto link like a bank reco. Statement with standard codes and procedure. As like PAN
based IT system. This will help to avoid gap and reco. and make all systems work more efficient
and faster.
(Prothious Engineering Services P. Ltd, Navi Mumbai)
R11
Recent changes in the softex part really help the industry.
136
R12
It should be made online in place of physical paper work.
41. Query
Refund of service tax
Response
R1
This refund also should be disbursed thru STPI similar to CST. ( Accenture
Bangalore)
R2
Service tax on the input services may be made exempted for STP/EHTP unit. A unit having only
exports will have to apply for refund which will block the vital capital for long period.
R3
Pvt
Ltd,
Introduction of upfront service tax exemption for services being utilized by STP Units in relation
to export of output services. Introducing/ extending benefits as available under the SEZ scheme
to STP Units. This will improve the cash flow for the units and ease out the working capital
requirements.
R4
Services
(Colt Technology Services India Pvt Ltd, Bangalore)
Policy should be more clearly as to which expenses should be considered as input and not leave
it to the interpretation of the concerned departmental officer.
R5
Should be exempted like SEZ.
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (Raconsys Consultancy Services Pvt.
Ltd., Bhubaneswar)
R6
Reconciliation should be done to give benefits. Benefits should be given. st should be exempted on
all services availed by STP units.
R7
We need to change from ‘refund for tax paid’ to ‘Exempt from paying tax’. Instead of paying first and then
applying for a service tax refund, we need to be exempt from paying it. Right now it takes over 3-4 months to
get a refund for a quarter, which could also go into a loop of appeals and reappeals and get delayed further.
R8
Since the cenvat and service tax paid is already appearing in the returns filed with the Central Excise
department, based on these returns the refund should be processed, if required a CA certification
may be asked for.
R9
Yes, all the items used and used in relation to export should be allowed. It should be incorporated
accordingly.
R10
The exemption of Service Tax should be allowed for all input services in relation to the exports by
the STP/EHTP Units and Infrastructure Service Provider/IT Park similar to the procedure followed
for SEZ units.
137
R11
The exemption/refund/credit of Service Tax may be provided on all items relevant to operation of
STP/EHTP units . In case of any doubt as to whether any goods or services are required by the STP/
EHTP unit/ or not, it may be decided by the Jurisdictional Director, Software Technology Parks of
India (HCL, Noida)
R12
The STPI units should be exempt from service tax paid. It will make the work easier as there is lot
of repetitive work. Government can make guidelines and on the basis of that Company can claim
(Sopra India Private Limited,
exemption, instead of first paying it and than claiming refund. Noida)
R13
A unit which is only exporting and has no DTA sales should be exempt form paying service tax on
input services. (RMSI, Noida)
R14
Refund procedure should be simplified.
(IBS Software Services Private Limited, Thiruvananthapuram)
R15
There should not be any separate policy for CENVAT Credit on Service Tax paid for claiming refund
under STP Schemes.
(ECI Telecom India Pvt Ltd, Navi Mumbai)
R16
Yes.It should not be refund.But a clear exemption and refund has its own loop fools and delays.It
will be really benefit is based on certification or status the charging of taxes is exempted.
R17
CENVAT paid on input should be allowed for service tax payment on output.
42. Query
Exports proceeds
1
Units will be allowed to retain 50% of its export earnings in the EEFC account
Response
R1
The current guidelines of RBI to convert the export profits to INR within the end of subsequent
month should be relaxed to enable making of import permission ( Electronics for Imaging India
Pvt. Ltd, Bangalore)
R2
STP units to be allowed to retain 100% of its export earnings in EEFC Account
(First American (India) Pvt. Ltd, Bangalore), (FusionCharts Technologies LLP, Kolkata)
R3
For better appreciation and value for money.
R4
This limit should be lesser.
138
R5
Welcome move need more help & real time systems from RBI to understand actual trends in market
and authorized expert advice.
R6
Continue this retention limit.
(QUALEX SYSTEMS PVT LTD, Pune)
2
Export proceeds will be realized within 12 months
Response
R1
Validity of this rule should be extended up to March’15 keeping the global recession in mind.
R2
This limit should increase.
R3
At present the realization is taking more time, hence the period may be extended to 18 months.
(JSS IT Solutions Ltd, Bhubaneswar), (HCL, Noida)
R4
Should be relaxed further.
R5
Period of 12 months is good enough for realization of export proceeds.
(RMSI, Noida), (AuroIN India Ltd., Bhubaneswar)
R6
Yes. The time limit should be done away with like SEZ.
R7
6 months is fine provided justifiable exceptional cases can be allowed more limit.
43. Query
Intra unit transfer
Response
R1
For same entity it can be done on self-declaration and intimation(Accenture services Pvt. Ltd,
Bangalore)
R2
Transfer of services to domestic units of same enterprise can be allowed and should not be
calculated against DTA sale. Movements of goods between different floors of the same building
under the same licenses to be permitted without any specific approval. ( First American (India)
Pvt. Ltd., Bangalore)
R3
All power should be given to STPI to obtain clearance from STPI only.
R4
This should allow with least documentation and process.
R5
Inter Unit Transfer of services and goods should be stream lined so as to give some respite for
genuine transfers.
139
R6
Presently intimation is required for inter unit transfer but in some state i.e. Chennai and Bangalore
STPI require NOC for giving permission for inter unit transfer. Hence uniformity is maintained on
intimation basis for Inter unit transfers. (HCL, Noida)
R7
The Inter Unit transfer should be allowed based on self certification of the Company. It will ease
the working and significant efforts made by Companies in Interunit transfers would be saved, like
STPI approval, customs approvals, etc. which at time delays/ hamper the work.
R8
Procedure to be simplified based on IT based tracking system rather than warehousing
certificates.
44. Query
Sub-contracting
Response
R1
Services should be included as a part of sub-contracting. A blanket approval of 25% can
be included up-front and the same can be reviewed on quarterly basis for monitoring.
(Infosys Ltd, Bangalore), (Infosys Limited, Bhubaneswar)
R2
Sub Contracting should be allowed up to 60% of FOB value.
R3
Sub – contracting should be encouraged.
R4
Should be more simplified and made easier.
R5
Yes it could be governed by standard and simple guidelines.
R6
Provision for sub-contracting should be made similar to the provisions for DTA. A blanket approval
at the beginning of the year should be provided instead of obtaining approval from STPI on case to
case basis.
R7
Discontinuation of approval process required.
R8
It should be allowed.
R9
We don’t do subcontracting. so no experience.
45. Query
Exit and de-bonding procedure
Response
140
R1
Exit and de-bonding procedure should be made an single window process
(BCD Travel India Pvt. Ltd., Bangalore)
R2
The units having positive NFE should be allowed to de-bond by paying only 25% of duty liability after
applying the depreciation norms. ( Infosys Ltd., Bangalore), (Infosys Limited, Bhubaneswar)
R3
The usefulness of assets as per FTP policy is much longer than actual useful life of assets
R4
(COLT Technology services India Pvt. Ltd., Bangalore)
Exit procedure should be more relaxed and less cumber sum.
R5
STPI should be the ultimate authority in this process.
R6
If the Jurisdictional Director, STPI is authorized, they will understand the necessity better than any
other authority.
R7
It should be simplified for the units which have positive NFE and fulfilled Export Obligations.
R8
It should be simpler. Once STP approves, customs should give automatic approval, after payment
of necessary duties or compliances. R9
Yes it should be online there by cancelling your STP status and updating to all concern electronically.
Generating de-bonding Certification online.
R10
Exit and de-bonding procedures should be simplified.
(Morgan Stanley Advantage Services Pvt. Ltd., Navi Mumbai), (Qualex Systems Pvt Ltd,
Pune)
(ProcessMAP Infotech Pvt.Ltd., Bhubaneswar), (iT Gurus Software, Navi Mumbai)
(Enterprise System Solutions (P) Ltd, Bhubaneswar), (Cummins Research & Technology Ind
Ltd, Pune)
46. Query
Infrastructure Service Providers
Response
R1
Industry supported utilization of duty free goods for setting up of DR facility in IT parks. Since
such facility will have to be utilized for export activities during business interaction.
(COLT Technology Services India Pvt. Ltd., Bangalore)
R2
20% of the space in IT parks is recommended to be earmarked for DR-DCP (Infosys Ltd., Bangalore)
R3
Export activities for which DR facility is utilized should be treated as deemed export
(LT-Apparel Pvt. Ltd., Bangalore)
R4
75% of the space in IT park should be reserved for STP/EHTP units (Infosys Ltd., Bangalore)
141
R5
Changes should be made in FTP to include private infrastructure service provider / IT park
R6
(Flow Serve India Controls Pvt. Ltd., Bangalore)
Private Infrastructure Service Provider / IT Park should be encouraged, thru PPP model, wherein
Private parties bring in cash and technical expertise and the Govt. works as facilitator.
R7
IT Parks should be allowed for duty free import / DTA procurement of all goods (including
construction materials) and services through STPI. (NIIT Technologies Ltd, Kolkata)
R6
Yes, such IT parks are a boon for blossoming industries which in the initial years of inception
cannot invest in heavy infrastructure and the developer should be allowed to duty free purchases
(RMSI, Noida)
1
Should Private Infrastructure Service Provider/IT Park should be encouraged to create
infrastructure facilities and other amenities to be used by the entrepreneurs for Software, IT
and IT Enabled Services as well as Electronic Hardware and Manufacturing
Response
R1
Since they are availing concessional rates on land, the govt. should fix the rent in a concessional
ways so that SMEs will be benefited.
R2
By providing incentives and financial assistance.
(TATWA Tower IT parks, Bhubaneswar)
R3
Yes, for creating the IT infrastructure.
R4
Yes, strongly in TIR ii and iii cities. And infra should be used for both domestic and export
purpose.
R5
Yes, by providing similar incentives provided they pass on the benefits to the STP/EHTP units.
R6
The only way to increase quality infrastructure available for IT & ITeS is by encouraging
and allowing Private Infrastructure Service Provider/IT Park. The ICT policy should have
enabling clauses for availability of land by state governments. Minimum 40% of the approved
area should be allowed for ancillary services like cafeteria, gym, service apartment, tug
shops, shopping arcade, food courts, recreational area, gaming zones, banks, atms, etc.
R7
Yes, State Level support is also required.
(Infosys Limited, Bhubaneswar )
R8
IT Park should be encouraged to create infrastructure facilities and other amenities to be used by
the entrepreneurs for Software, IT and IT Enabled Services as well as Electronic Hardware and
Manufacturing.
142
R9
Yes, Private Infrastructure Service Provider/IT Park should be encouraged to create infrastructure
facilities and other amenities to be used by the entrepreneurs for Software, IT and IT Enabled
Services as well as Electronic Hardware and Manufacturing.
R10
Yes, for creating the IT infrastructure it is essential.
R11
Yes. Cost should be moderated.
R12
Yes. It should be encouraged for healthy competition but with certain control over their activity.
2
Do you feel, a minimum area of total approved space of Infrastructure Service Provider/IT
Park should be earmarked and utilised for STP/EHTP units
Response
R1
Yes, minimum 50% area of total approved space of infrastructure Service Provider/ IT Park should
be earmarked and utilized for STP/EHTP units.
R2
We should start with 25% initial 10 years.
R3
If we are giving them benefits, they should earmark at least 50% of the space to STP/EHTP units.
R4
50% for STP and 50% for SEZ.
R5
Yes it should be minimum of 50% of total constructed area.
R6
Yes, 75% area has to be for STP/EHTP units.
R7
A minimum 50% area of total approved space of Infrastructure Service Provider/IT Park should be
earmarked and utilized for STP/EHTP units like SEZ unit.
(Confederation of Information Technology, Bhubaneswar)
R8
30% as this will help to attract more business and manpower.
R9
Similar to SEZ Developer.
3
Please suggest how customs bonding could be made and NFE would be achieved in IT Park/
Infrastructure facilities
143
Response
R1
Custom bonding and NFE should not be required like SEZ for IT Parks.
(Raconsys Consultancy Services Pvt.Ltd, Bhubaneswar)
R2
Like SEZ developers, It parks should be allowed similar way.
R3
Mandate should be set with 100% exemption on goods procured for IT Companies which are custom
bonded.
R4
The NFE in this should calculate of the exports made by the IT& ITeS units operating from these
Private STP/IT Parks.
R5
Since IT Parks are not directly exporting, the NFE provision should be dispensed with otherwise the
resultant exports made by the occupant STP units should be taken in to consideration for NFE.
R6
R7
Permission for self warehousing.
(Tata Elxsi Limited, Thiruvananthapuram)
On same line like STP.
R8
If possible, remove customs bonded warehouse requirement.
4
Do you feel the Infrastructure Service Provider/IT Park should be allowed for duty free
import and/or procurement from DTA in respect of all types of goods (including construction
materials) and services
Response
R1
Yes, they should be allowed for duty free import and/ or procurement from DTA in respect of all
types of goods and services. Customs/ excise will monitor such import/ procurement like SEZ.
R2
Yes and monitoring should be done In a more simplified manner the way it is done in SEZ.
(AuroIN India Ltd., Bhubaneswar), (Aabsys, Bhubaneswar)
R3
While I am not the expert, I think the answer is yes. The same way customs/excise monitor STP/EHTP units.
R4
Yes these IT Parks should be allowed duty free imports and/or procurement from DTA in
respect of all types of goods (including construction materials) from DTA, customs will
easily monitor them from the soft bonding, separate records keeping and CA certification.
144
R5
Yes, All items (except items to be consumed by the employee) > List of goods approval to be made
mandatory.
R6
Yes these are vital requirement to boost the Infrastructure sector. There should be no disparity between
IT Parks & SEZ Developers. The items which are allowed for SEZ unit should also be made available for
IT Park including Steel & Cement and other construction materials as certified by the Chattered Engineer.
R7
Construction materials must not be imported. Other it park related materials should be allowed
duty free for setting up world standard infrastructure.
R8
Yes based on control procedure as like presently done for other areas.
5
What should be the procedural & operational guidelines, Investment, minimum Area and
other Criteria as well as Performance Monitoring , in respect of Infrastructure Service
Provider/IT Park
Response
R1
There should be no restriction of minimum area and other should follow like SEZ.
R2
The minimum area should be 50,000 sq ft, Mime investment Rs 10 Crores, performance
monitoring by the revenue both exports as well as domestic, the employment generation
should be one employee per 180 sq ft including common area and other facilities.
R3
It should be similar to the SEZ.
(Confederation of Information Technology Enterprises, Bhubaneswar )
6
Should the Infrastructure Service Provider be allowed to create Disaster Management
&Recovery Centre by using duty free goods
Response
R1
Yes. To create synergy within counties and organization with similar services.
R2
Absolutely. This is another area of opportunity.
R3
Yes, this will encourage more entrepreneurs to set up Private STP/IT Parks as well create some
additional area for other units to operate from there.
145
R4
Yes. It can be part of Policy 20% space can be earmarked for DR-BCP. The same can be approved by
the set up approval committee.
R5
Yes, because in current Scenario Disaster Management & Business Continuity is main concern for
IT Industries throughout the world.
R6
Yes, it is essential service demand by offshore customers.
7
To increase penetration of the IT industry in hinterland and to increasing employment
opportunities and rural areas concept of ‘Rural IT Park’ may be promoted
Response
R1
8
Rural investments should be give max. benefits. (Prothious Engineering Services P. Ltd., Navi
Mumbai)
What should be the EXIT norms & De-bonding procedure for the Infrastructure Service
Provider/IT Park
Response
R1
EXIT norms & De-bonding procedure for the Infrastructure Service Provider/IT Park should be like SEZ.
R2
AS per SEZ and make it as simple as possible.
R3
After the export commitment of positive NFE on overall terms is achieved to cover the entire
volume of credit availed by the Service provider, the exit norm should be relaxed, as the purpose of
Govt. in promoting IT is already achieved.
R4
Should be similar to provisions made under SEZ.
R5
(a) Six months notice (b) Adjustment of work force (c) Adequate compensation to workforce.
R6
47. Query
Stricter as this will help to keep interested parties only to enter into it and achieve the real purpose.
Any other suggestions that you feel are most relevant and should be incorporated in a
modified STP/EHTP Scheme.
Response
R1
There should be specific guide lines for SMEs to get the govt. projects in a hassle free manner.
R2
The STP unit should be given incentive at par with SEZ units.
146
R3
Capital Incentives and financial assistance.
R4
The Income Tax benefits should be restored.
R5
Implementation of robust incentive schemes. Subsidiary and reimbursement schemes for
participation in international forums to enhance business. Funding for organizing conferences to
encourage participation of counties who are interested in invest in Indian companies, preparation
of delegation visits to different growing counties which can help flourish business. Organizing
forums to encourage ex-change of services within organizations.
R6
ICT should be such drafted that Private Service Providers are encouraged to setup more Private IT
Parks and there is no scarcity of space. It is infrastructure first them IT&IRTeS is bound to grow
especially in Tier II and Tier III cities.
R7
The policy should be simplified and incentives like Income Tax exemption should be continued.
R8
It is essential to take the STP Scheme forward and make it more attractive by giving fiscal benefits
in a staggered manner for continual growth. Moreover, the IT-ITES Industry needs support at
this critical juncture to overcome the challenges and threats. The IT Industry has grown at a
remarkable pace as a result of special impetus provided by the Government. However, for the long
term continuance of India’s leadership in the IT global market space, the policy may be modified
suitably to provide with the same level of fiscal incentives, for a level playing field by granting
income tax exemption/reimbursement and making provision in the Policy.
R9
The STP unit should be given incentives at par with SEZ units.
(Raconsys Consultancy Services Pvt. Ltd, Bhubaneswar)
R10
Restoration of the Income Tax benefits and other facilities similar to SEZ should be made provision
for STP units also.
R11
More transparent scheme will be developed if its less manpower driven and this will also work
more perfect and faster. (Prothious Engineering Services P. Ltd., Navi Mumbai)
147
Appendix VII
Draft Resolutions
No……………………..
Department of Electronics and Information Technology
New Delhi,
The …………Date ………. Month ………….Year
RESOLUTIONS
The Government of India identified software and information technology as an area of focus and announced
a policy in 1986 making computer software exports, software development and training major thrust areas as
per resolution no. 17(38)/COMP/84(Part) dated 18th December, 1986. The objectives of the policy was to promote
software export to take a quantum jump and capture sizeable share in international software market, to promote
the integrated development of software in the country for domestic as well as export markets, to simplify the
existing procedure for enabling the software industry to grow at a faster pace and to establish a strong base
of software industry in the country. As a follow-up of the resolution Software Technology Parks of India, an
autonomous society under the Department of Electronics (Now Department of Electronics and Information
Technology) was established in 1991.
The Government of India formulated Foreign Trade (development and regulation) Ordinance, 1992 with an objective
to provide for the development and regulation of foreign trade by facilitating imports into and augmenting
exports from India and for matters connecting therewith or incidental thereto vide gazette notification dated
7th of August, 1992.
The Department of Commerce and Industry , Government of India, vide Notification No. 42(N-8) 92-97 Dated
14th September, 1992 in pursuance of the powers vested in sub-section 1 of Section 3 of the Foreign Trade
(Development & Regulation) Ordinance, 1992 ratified a scheme called the Electronic Hardware Technology Park
(EHTP) Scheme for building up a strong base for electronics and hardware industry in the country with focus on
enhancing its export potential and developing an efficient electronic component industry in the country. Further,
the Department of Electronics, Government of India, issued a resolution on 22nd February, 1993 in respect of
Software Technology Park (STP) scheme which was subsequently notified by the Department of Commerce and
Industry vide no. 33(RE) 1992-97 dated 22nd March, 1994.
The Ministry of Industry, Department of Industrial Policy and Promotion, Government of India (formerly,
Department of Industrial Development) notified constitution of the Inter Ministerial Standing Committee (IMSC)
for units in EHTP and STP vide notification no. 117(E) dated 22nd February, 1993. The IMSC was mandated to
consider application for setting up unit under the STP scheme and EHTP scheme, issue of industrial license,
foreign technology collaboration and duty free import of capital goods. The Department of Electronics, Government of India, declared the Jurisdictional Directors of Software Technology
Parks of India as its designated officers for implementation of STP and EHTP schemes and IMSC delegated specific
powers to jurisdictional Directors of Software Technology Parks of India with a view to speed up the decision
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making process vide no. 15(100)/93-EXPORT dated 24th June 1993. IMSC delegated those specific powers to
Jurisdictional Directors of STPI which had been delegated to the Development Commissioners of EPZ/EOU vide
press notification no 14 (1991 Series) dated September, 1991 issued by Department of Industrial Development,
Ministry of Industry, Govt. of India.
The Jurisdictional Directors of Software Technology Parks of India were further given adjudication power in respect
of STP and EHTP schemes vide notification no. S.O. 106( E) dated 30.01.2006 of Director General of Foreign
Trade. Reserve Bank of India, exchange control department had already authorized Jurisdictional Directors of
Software Technology Parks of India in their capacity as Designated officers of DeitY) for valuation of export, vide
AD circular no. 14 dated 19.05.1987. All the EXIM Policies (Later called Foreign Trade Policy) of Government of India and related Handbook of Procedures
from 1992 onwards recoded the modifications of policies and procedures of implementation of STP and EHTP
schemes from time to time. However, a comprehensive review of the schemes in the context of changing national
and global scenario and technological developments was called for.
The Government of India have had under consideration, question of reviewing the existing policies in order
to make the STP/EHTP schemes more relevant in the present context incorporating necessary modifications
from past experience for streamlining/simplifying the procedures of approvals in respect of STP/EHTP unit and
Infrastructure Services Provider, monitoring of their performance, their promotion through incentive schemes,
support measures and to make it a growth engines for Information Technology and Information Technology
Enabled Services as well as Electronics System Design and Manufacturing products and services (Hereinafter
called as IT/ITES and ESDM products and Services) sector with an integrated view of domestic as well as export
markets.
1.1.
With a view to fulfil these objectives the Department of Electronics and Information Technology will
continue to promote the ecosystem for development and export of IT/ITES and ESDM products and
Services by establishing Software Technology Parks/Electronics Hardware Technology Parks in various
locations in the country, with primary focus beyond Tier-I locations, to create infrastructure facilities
and other amenities to be used by the entrepreneurs for IT/ITES and ESDM products and Services sector
for both domestic and export markets and also to create IT/ITES and ESDM manpower and to train
professionals in the similar fields.
1.2.
With an objective to promote IT/ITES and ESDM products and Services units, Department of Electronics and
Information Technology, Govt. of India has established centres of Software Technology Parks of India at
various locations having its Head Quarter at New Delhi. The Jurisdictional Directors of Software Technology
Parks of India who are designated officers of the Department of Electronics and Information Technology
(DeitY), Government of India shall implement STP/EHTP Scheme in their respective jurisdictions which
are notified by Software Technology Parks of India from time to time. The Jursidictional Directors of STPI
will exercise all the powers delegated by the Department of Electronics and Information Technology and
Inter Ministerial Standing Committee (IMSC) through the Director General, STPI for implementation of the
schemes. The Inter Ministerial Standing Committee which is the apex body for formulation, relaxation
and implementation of the STP/EHTP schemes shall be notified from time to time by the DeitY with
the Secretary, DeitY as the Chairman and Director General, STPI as Member Secretary. Other members
of the IMSC will include representatives of Ministry of Commerce and Industry, Science & Technology,
Electronics and Information Technology, CBDT, CBEC, DGFT and Planning Commission.
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In case of STP/EHTP schemes Software Technology Parks of India shall be acting as single window for
statutory, promotional and support services. Endeavour will be made to enact a single window act so
that all government agencies can at all levels – central, state, and local – function through this single
window in respect of matters relating to STP/EHTP schemes.
1.3
Further to encourage development of the required Infrastructure, Department of Electronics and
Information Technology, Govt. of India shall permit Infrastructure Service Provider (ISP) to set up IT Park
as well as R&D, Training, and Incubation infrastructure to be used by the IT/ITES and ESDM products
and Services units for both domestic and export markets. The said approaches to boost IT/ITES and
ESDM products and Services sector under the Software Technology Park (STP) and Electronics Hardware
Technology Park (EHTP) schemes is amplified in the following paragraphs of this resolution.
2.1 Software Technology Park (STP)/Electronic Hardware Technology Park (EHTP) Scheme
2.1.1 The Software Technology Park (STP) Scheme is a 100% Export Oriented Scheme for undertaking IT
and IT Enabled Services for export using data communication link or in the form of physical export
including export of professional services such as computer software services, information technology
enabled services including back-office operations, call centres, content development or animation, data
processing, engineering and design, Geographic information system services, human resources services,
insurance claim processing, legal data bases, medical transcription, payroll, remote maintenance, revenue
accounting, support centres, back office, website services, e-commerce, testing & Integration, Disaster
Recovery and Business Continuity (DR&BC), Knowledge Process Outsourcing (KPO), Business Process
Management (BPM), Knowledge Process Management (KPM) and all other such services not included in the negative list of services.
2.1.2 The Electronic Hardware Technology Park (EHTP) Scheme is a 100% Export Oriented Scheme for building
up a strong electronics system design and manufacturing industry in the country with focus on enhancing
its export potential and developing an efficient electronic component industry in the country including
trading and warehousing of electronic and hardware goods primarily for export purposes only. However,
the EHTP unit engaged in both trading and manufacturing activities shall maintain separate records for
trading and manufacturing activities.
2.1.3 A Software Technology Park (STP)/Electronic Hardware Technology Park (EHTP) unit may be set up by the
Central Government, State Government or any combination thereof or by Public Ltd. Company, Private
Limited Company, Partnership, Proprietor ship or others. A STP/EHTP unit may be an individual unit
by itself operating from its own/any other location or it may be one of such units located in an area
designated as STP/EHTP Complex set up by the Software Technology Parks of India or Infrastructure
Service Provider approved by IMSC.
2.1.4 The Scheme is administered by the Department of Electronics and Information Technology, Government
of India, through Director General, Software Technology Parks of India, a society established by the
Department of Electronics & Information Technology, Government of India and registered under the
Society Registration Act 1860. The Director General, Software Technology Parks of India shall implement
the schemes through Jurisdictional Director of Software Technology Parks of India as notified by him
from time to time.
2.1.5 Director General, Software Technology Parks of India shall be delegated necessary powers to resolve all
operational issues through Jurisdictional Directors. Director General, Software Technology Parks of India
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shall also act as first appellate authority over the decisions of Jurisdictional Directors in all matters
relating to STP/EHTP schemes.
2.1.6 Application for setting up of STP/EHTP unit in the prescribed form with relevant documents will be
submitted to the concerned Jurisdictional Director of Software Technology Parks of India. On approval,
a Letter of Permission (LOP) shall be issued by the Jurisdictional Director, Software Technology Parks
of India. LOP shall have an initial validity of 3 years, by which time unit should have commenced
production. Its validity may be extended further up to 3 years by Jurisdictional Director, Software
Technology Parks of India. However, proposals for extension beyond six years shall be considered in
exceptional circumstances, on a case to case basis by IMSC. Once unit commences operation as per their
approved activity, LOP issued shall be valid for a period of 5 years for its activities.
After completion of 5 years of operation the LOP of STP/EHTP unit will be renewed automatically subject to
condition that the unit achieves positive NFE unless it opts for exit through an application. Adjudication
process shall be initiated against the defaulting unit, and wherever required approval of IMSC will be
sought for renewal of defaulting units.
2.1.7 A single LOP shall be issued to set up IT/ITES and ESDM unit without any restriction in areas of operation
except the areas in the negative list, if any. In case of confusion whether any particular area of activity
falls under the category of IT/ITES and ESDM or not, decision of Director General, Software Technology
Parks of India shall be final.
2.1.8
STP/EHTP Unit shall execute an LUT with concerned Jurisdictional Director of Software Technology Parks
of India. Failure to abide by any of the terms and conditions of LOP/ LUT, shall render the unit liable for
penal action under provisions of the FT(D&R) Act and Rules and Orders made from time to time, without
prejudice to action under any other law / rules and cancellation or revocation of LOP.
2.1.9 If an enterprise is operating both as a domestic unit as well as an EHTP/STP unit, it shall have two
distinct identities with separate books of accounts. It is, however, not necessary for it to be a separate
legal entity.
2.1.10 An STP/EHTP unit may import or procure from domestic tariff area, without payment of duty, taxes or
cess all types of goods, including capital goods (new or second hand), raw materials, semi-finished
goods, components, consumables, spares and materials for making capital goods related directly or
indirectly for approved operations as per LOP except prohibited items under the import Trade Control
(Harmonized System) Classification of Export and Import of Items. Exemptions from payment of duty,
taxes or cess, on all types of goods and services imported or procured from domestic tariff area shall
also be allowed for setting up and maintenance of building and allied infrastructure, by the unit or the
contractors appointed by such unit, and all the documents in such cases should bear the name of the unit
along with the contractor and these should be filed jointly in the name of unit and the contractor.
2.1.11 STP/EHTP unit shall be a positive net foreign exchange earner. NFE earnings shall be calculated
cumulatively in the block period as per FTP from time to time. Provided that if there is a failure to achieve
positive net foreign exchange earnings, by a STP/EHTP Unit, such unit shall be liable for penal action
under the provisions of Foreign Trade (Development and Regulation) Act, 1992 and the rules made there
under.
2.1.12 STP/EHTP Units will be encouraged to undertake R&D projects to absorb the imported know-how. STP/
EHTP units approved for R& D activities will be permitted to meet the NFEP within maximum period of
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10 years which can be extended by IMSC for deserving cases. Further, the STP/EHTP units approved for
R&D activities shall be allowed accelerated depreciation of their capital investments and duty liability
and penalty shall be written off in the event of failure to arrive at product innovation by the STP/EHTP
unit approved for R&D activities.
2.1.13 STP/EHTP Unit for the purpose of availing duty free facility shall be permitted for “Soft Bonding” under
which all duty free import /procurement/shifting/Inter Unit Transfer related customs clearances will be
on the basis of self-declaration dispensing with physical bonding and procurement certificate/ CT-3 Form
subject to periodic examination by concerned authority.
2.1.14 Person(s)/employee(s) authorized by STP/EHTP unit may work from a place outside the said unit, subject
to the following conditions:
(a) There must be an Authorisation from the unit specifying the duration of such authorization.
(b) Responsibility for carrying out the work and supervision, if any, be that of the unit, which will be
liable for any misuse.
(c) Export of the resultant products/services would take place only from the premises of the unit.
2.1.15 Soft Bonding shall not be required for those units who are not availing duty free benefits. In the event
of requirement of emergent steps to be taken by STP/EHTP units for Disaster Recovery and Business
Continuity, the decision of Director General, Software Technology Parks of India for relaxation of norms
of bonding, utilisation of goods and services and deployment of manpower made on technical grounds
will be final.
2.1.16 Units having positive NFE and duty free goods depreciated to zero value or having no duty free goods
shall be allowed to avail automatic exit route with intimation to Jurisdictional Director, STPI and customs/
excise authority. For other units/ISP exit will be approved by Jurisdictional Director, STPI on obtaining
duty clearance certificate from Customs/excise authority.
2.2
The STP/EHTP unit shall be eligible for the following benefits:
2.2.1
The STP/EHTP units will be entitled for any non-profit linked as well as investment linked incentives of
Govt. of India as announced from time to time.
2.2.2
Full exemption from Income Tax shall be allowed for new STP/EHTP units that come up in special category
states of north-eastern states, Jammu &Kashmir, Uttarkhand, Himachal Pradesh, Bihar and Jharkhand
or such other states notified by Govt. of India from time to time. Further full exemption of Income Tax
shall be allowed for new units that are established within the rural areas of other states subject to the
condition that the units are established as new independent entities and employ a minimum of 100
skilled IT/ITES or ESDM professionals.
2.2.3
STP/EHTP Units, while computing their taxable income shall be allowed double deduction of expenditure
made for addition of value to the unit e.g., investment in infrastructure development, training of
manpower, business promotion and marketing outside the country, R&D activities, quality/process/
security/environmental certification, technology up-gradation, IPR and patenting.
2.2.4
Further STP/EHTP units being knowledge intensive industry shall be allowed to count all expenses made
towards salary/wages as investment for the purpose of computation of tax under Direct Tax Code.
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2.2.5
One time incentive will be offered to STP/EHTP units for acquiring Quality, Process, Security, environment
and other relevant certification on reimbursement basis. Suitable incentive will be provided for up
gradation of technology, standards and quality and enhancement of productivity, efficiency, skill, and
resources of STP/EHTP units.
2.2.6
Govt. of India shall make an endeavour so that all supplies to STP/ EHTP units/Infrastructure Service
Providers are provided exemption from State and local taxes, levies and duties, including stamp duty,
VAT/ sale tax/ octroi/ entry tax / electricity duty.
2.2.7 Exemption of Central Sales Tax (CST) on goods manufactured in India, Central Excise Duty on goods
procured from DTA, Duty on fuel procured from domestic oil companies / Depots of domestic oil Public
Sector Undertakings as per drawback rate notified by DGFT from time to time, additional duty of excise
levied on fuel under the Finance Acts would also be admissible.
2.2.8
Exemption of Service Tax on inputs services in relation to the exports by the STP/EHTP units/ISP will be
provided.
2.2.9
Export proceeds will be realized within 12 months.
2.2.10 Units will be allowed to retain 100% of its export earnings in the EEFC account. STP/EHTP units shall be
extended credit facility in foreign currency against EEFC balance. They shall be allowed to keep Packing
Credit in Foreign Currency (PCFC) into EEFC account and liquidate the PCFC loan with foreign exchange
earnings.
2.2.11 Unit will not be required to furnish bank guarantee at the time of import or going for job work in DTA,
where unit has (i) a turnover of Rs. 5.00 Crore or above; (ii) The unit is in existence for at least three years;
and the unit has achieved positive NFE / export obligation wherever applicable; has not been issued a
confirmed demand, during the preceding 3 years, on grounds other than procedural violations, under the
penal provision of the Customs Act, the Central Excise Act, the Foreign Trade(Development & Regulation)
Act, the Foreign Exchange Management Act, the Finance Act, 1994 covering Service, any allied Acts or
the rules made there under, on account of fraud /collusion / wilful miss-statement /suppression of facts
or contravention of any of the provisions thereof.
2.2.12 All products and services of STP/EHTP Unit shall be exported except the permissible sales in the Domestic
Tariff Area (DTA). A STP/EHTP Unit may sell goods and services in the Domestic Tariff Area without any
limit on payment of duties. The STP/EHTP units shall be allowed for DTA clearance of their products,
which are covered under FTA/ITA1 items list, on payment of duty at par with the duty imposed on imports
of such FTA/ITA1 items. Import of components and raw materials for production of such items, however,
will be fully exempted from all duty, tax and cess in order to de-incentivise shifting of production facility
of such items to foreign territory.
2.2.13 Further STP/EHTP units will be allowed DTA sale at concessional duty to the extent of 100% of their
export value in addition to unlimited DTA sale at applicable duty with a view that such sales in domestic
market shall reduce the Import of the country and resultant Foreign Exchange Outflow.
2.2.14 Supplies made from DTA to a STP/EHTP unit will be regarded as deemed export.
2.2.15 Transfer of manufactured/capital goods and services from STP/EHTP unit to another EOU / EHTP /STP
/ BTP unit is allowed with prior intimation to concerned Jurisdictional Director, STPI. In case of bonded
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premises Customs authorities will also be intimated.
2.2.16 Sharing of infrastructure facilities including utilities located in EOU/EHTP/STP/BTP units shall be
allowed by other EOU/EHTP/STP/BTP unit wherever feasible, without removal of any duty free equipment
from importing/procuring units and without reducing any obligation on such equipment on importing/
procuring units.
2.2.17 Subcontracting of both production and production processes may also be undertaken without any limit
through other EOU / EHTP / STP / BTP / SEZ units and vice versa, on the basis of records maintained in
unit.
2.2.18 STP/EHTP units shall be allowed to undertake reconditioning, repair, remaking, testing, calibration,
quality improvement, up-gradation of technology and re-engineering activities on the domestically
procured and imported goods for export or return into DTA to the same supplier from whom these goods
were procured.
2.2.19 STP/EHTP units are allowed to procure spares and components, to the extent of 5 percent of the free on
Board (FOB) value of the manufactured articles exported by the unit during the preceding year for after
sale-service of the exported articles to the same consignor or buyer to whom manufactured articles are
exported.
2.2.20 STP/EHTP units are also allowed to procure spares and components to the extent of 2 percent of the
value of manufactured articles cleared into DTA during the preceding year for after-sale-service or the
same articles to the same consignor or buyer to whom manufactured articles were cleared in DTA.
2.2.21 Depreciation up to 100% is permissible in four years for computers and computer peripherals. For other IT
capital goods including Servers, Networking Equipment like Routers, Switches and Telecommunication
Equipment and all other items as allowed for import and procured duty free under STP/EHTP Scheme this
period shall be five years. Further in case of UPS batteries depreciation up to 100% shall be permissible
in 3 years.
2.2.22 De-bonding/DTA clearance of indigenous goods by STP/EHTP units shall be allowed on payment of
applicable duties on depreciated value. Goods depreciated to zero value will be automatically deemed to
have been debonded.
2.2.23 Inter Unit Transfer of Inputs shall be permitted to STP/EHTP Units
2.2.24 Return of goods and services shall be allowed to the exporting units without payment of duty in case of
rejection or other reasons.
2.2.25 Duty free imports/procurements in STP/EHTP unit shall be allowed to be used for training purpose
(including commercial training) subject to the condition that no duty free equipment will be installed
outside the STP/EHTP unit.
2.2.26 FOB value of export of an STP/ EHTP unit can be clubbed with FOB value of exports of its parent company
in DTA or vice versa for the purpose of according Export House and Trading House status.
2.2.27 STPI/EHTP units successfully mentoring at least 3 units, located beyond Tier-I locations, in order to bring
them to a level of exporting Rs. 10.00 Crore per annum will be allowed to club the FOB value of export of
the mentored units for the purpose of obtaining export house/trading house status.
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2.2.28 In order to encourage STP/EHTP units operating in Tier-I locations to expand their activity beyond Tier-I
locations as well as to promote the units in beyond Tier-I locations an entity having STP/EHTP units
operating from both Tier-I and beyond Tier-I may be allowed to club their FOB value of exports for the
purpose of meeting the export obligation in a combined way.
2.3
STP/EHTP units will be provided all statutory, promotional and support services through STPI as a
single window agency in a manner that includes the following:
2.3.1 Exemption on all types of goods and services shall be applied to the Jurisdictional Director, Software
Technology Parks of India along with the list of goods and services, including machinery, equipment and
construction materials duly certified by a Chartered Engineer for approval by the Director.
2.3.2
In case of any doubt as to whether any goods or services are required by the STP/EHTP unit/ Infrastructure
Service Provider or not, it shall be decided by the Director General, Software Technology Parks of India.
2.3.3 The utilization of the goods imported or procured from the Domestic Tariff Area by the Unit and
performance shall be quarterly reported to the Jurisdictional Director, STPI.
2.3.4
Jurisdictional Director Software Technology Parks of India on behalf of DGFT shall allot Importer-Exporter
Code to the unit if the same has already not been allotted to the entity.
2.3.5
Jurisdictional Directors of STPI as Designated Officers of the Department of Electronics and Information
Technology will do valuation and certification of exports declared on SOFTEX form by all IT/ITES and
ESDM production and Services units.
2.3.6
To ensure a uniformity of approach and understanding as well as faster resolution of the problems, all
the STP/EHTP units shall be brought under a single specialized Central Excise division. Such Central
Excise divisions will be housed in the Software Technology Parks of India offices so that all services can
be delivered from a single location.
2.3.7 STP/EHTP units will be provided with trade promotion support for image building, advertising and
marketing through trade shows, exhibition and market research. Infrastructure support will also be
provided by creating plug and play incubation space, DR facility, data communication facility, finishing
schools and other facility for human resource development and skill development. A suitable framework
will be designed involving both Industry and Academia to create an industry perspective courseware
comprising real-life case studies and insights into application of technology to make students “industry
ready” through suitable program.
2.3.8 STP/EHTP units will be provided Incubation support by not only providing hard infrastructure (plug
and play office space) but also services such as mentoring, advisory, access to technology experts and
potentially seed funding. Endeavour will be made to provide on-shore incubation facility to cater to
incubation needs of entrepreneurs.
2.3.9
Foreign equity up to 100% is permitted in the case of STP/EHTP. Angel investment by individual investors
or by informal group in STP/EHTP units shall be encouraged by extending exemption from capital gain tax
and hassle free exit provisions to the Angel investors. Credit ratings agency will be empaneled for rating
STP/EHTP units to enable them to obtain necessary capital from financial institutions. Venture capital
will be made available to STP/EHTP units through financial institutions by supporting such institutions
having dynamic norms for risk financing from a government fund of funds.
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2.3.10 Procedural problems faced by STP/EHTP units shall be sorted out by organizing open house having
participation of local customs, excise, foreign trade, RBI, and other field formation represented by officer
not below level of Deputy Secretary to Govt. of India.
2.3.11 Database of products and services of STP/EHTP units will be maintained for enabling Government agencies
to identify proper products or service provider for preferential procurement and interactive trade portal
will also be maintained to provide virtual buyers and sellers meet for the STP/EHTP units with their
foreign customers. The portal will also provide global market analysis and global importers directory.
Efforts will be made to include specialized services like video conferencing, language translation, virtual
office, virtual trade fair and e-transaction through the portal. 2.3.12 Benefits of Export Credit insurance through Export Credit Guarantee Corporation (ECGC) and Market
Access Assistance of Government of India at a very nominal/discounted premium to will be extended to
STP/EHTP units
2.3.13 A single return form compatible with the electronic filing system of Central Excise as well as the
computerised system of STPI will be devised.
3.0 Infrastructure Service Provider (ISP)
3.1
Application of infrastructure Service Provider for setting up of IT Park/R&D facility/ DR&BC facility /
Training facility in prescribed form with relevant documents will be submitted to the concerned
Jurisdictional Director of Software Technology Parks of India, which after examination will be forwarded
to IMSC for their consideration through Director General, Software Technology Parks of India.
3.2
On approval, the Letter of Permission issued to the ISP by the Jurisdictional Director, STPI shall be valid
for a period of three years within which time the Infrastructure facility should become operational by
commencement of production by at least one unit from the infrastructure facility. Validity of approval may
be extended further, in deserving cases, up to 3 years by the Jurisdictional Director, STPI. Extension of
approval beyond six years in deserving cases without commencement of operation can be considered by
IMSC. Permission required for addition of area, Decrease/De-bonding of area will be given by Jurisdictional
Director, STPI
3.3
Once the ISP facility commences production, approval issued shall be valid till the approval is cancelled
/ revoked by IMSC on the recommendation of Jurisdictional Director, STPI for non compliance of
obligations.
3.4
Applicability of procedures to STP/EHTP units on import or procurement of goods and services and
their utilisation, depreciation, disposal or de-bonding shall be mutatis-mutandis applicable to the
infrastructure service provider
3.5
Minimum of 50% of total approved facility of ISP should be utilized by STP/EHTP units.
3.6
The ISP shall be allowed to import or procure from domestic tariff area, without payment of duty, taxes or
cess. all types of goods and services including capital goods (new or second hand), raw materials, semifinished goods, components, consumables, spares and materials connected directly or indirectly with
approved operations as per LOP except prohibited items under the import Trade Control (Harmonized
System) Classification of Export and Import Items.
3.7
The exemptions from payment of duty, taxes or cess, on all types of goods and services imported or
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procured from domestic tariff area should be allowed for setting up and maintenance of Building and allied
infrastructure, by the Infrastructure Service Provider or the contractors appointed by the Infrastructure
Service Provider, and all the documents in such cases should bear the name of the Infrastructure Service
Provider along with the contractor and these should be filed jointly in the name of the Infrastructure
Service Provider and the contractor.
3.8
Infrastructure set up by Government or Government agency and STP and EHTP complexes set up by STPI
shall be entitled for all the benefits of Infrastructure Service Provider.
3.9
Exemption of duty, taxes or cess on all types of goods and services, required for setting up and maintenance
of the Infrastructure Service facility should be applied to the Jurisdictional Director, STPI along with the
list of goods and services, including machinery, equipments and construction materials duly certified by
the Chartered Engineer for approval by the Jurisdictional Director. The ISP will submit quarterly return
for procurement, consumption and utilization of goods and stock in balance.
3.10
In case of any doubt as to whether any goods or services are required by the Infrastructure Service
Provider or not, it shall be decided by the Director General, Software Technology Parks of India.
3.11
Infrastructure Service Provider shall execute an LUT with concerned Jurisdictional Director of STPI.
Failure to abide by any of the terms and conditions of LUT shall render the unit liable to penal action
under provisions of the FT (D&R) Act and Rules and Orders made there under, without prejudice to action
under any other law / rules and cancellation or revocation of LOP.
3.12
Where such Infrastructure Service Provider does not utilize the goods or services on which exemptions,
drawbacks, cess and concessions have been availed or unable to duly account for the same, they shall
refund an amount equal to the benefits of exemptions, drawback, cess and concessions availed without
prejudice to any other action under the relevant provisions of the Customs Act, 1962 Central Excise Act
1944, CST Act the Foreign Trade (Development and Regulation) Act, 1992 and action may be taken as
deemed fit under the provision of laws of Govt. of India.
3.13
The Infrastructure Service Provider shall not remove duty free goods from the approved premises to the
Domestic Tariff Area except with the permission of the Jurisdictional Director, STPI and customs and on
payment of duty applicable on such goods.
3.14
Infrastructure Service Provider being not directly involved with export activity shall be relived from
export obligation.
3.15
Foreign equity up to 100% is permitted in the case of Infrastructure Service Provider.
4.0.
Powers and functions of Jurisdictional Director of STPI
Jurisdictional Director of STP shall take all steps in order to discharge his/her functions under this Policy
to ensure effective implementation of STP/EHTP Schemes, speedy development of Infrastructure Service
Provider (ISP) and promotion of exports there from through the single window mechanism. The powers
of Jurisdictional Director STPI will include the following:
(1)
To issue Letter of Permission (LOP) to STP/EHTP units and ISPs;
(2)
Conversion of STP/EHTP to EOU and vice versa as per prescribed procedure;
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(3)
To allow increase in value of capital goods in terms of Indian Rupees, on account of foreign
exchange rate fluctuations;
(4)
To permit capacity enhancement without any limit ;
(5)
Permit broad-banding for similar goods and activities mentioned in LoP or to provide for backward
or forward linkages to existing line of manufacture;
(6)
Authorize change in name of company or implementing agency and change from a company
to another provided new implementing agency / company undertakes to take over assets and
liabilities of existing unit;
(7)
Permit change of location from place mentioned in LOP to another and / or include additional
location provided that no change in other terms and conditions of approval is envisaged and that
new location is within territorial jurisdiction of Jurisdictional Director of STPI;
(8)
Extend validity period of LOP by three years beyond initial validity period of LOP
(9)
Cancel LOP wherever warranted;
(10)
Permit merger of two or more units into one unit provided units fall within jurisdiction of same
STPI Jurisdictional Director subject to condition that activities are covered under provision of
broad banding;
(11)
Exercise powers of adjudication under Section 13 of the Foreign Trade (Development & Regulation)
Act, 1992 (No.22 of 1992), without any limits for STP units vide Notification no. S.O. 106 (E)
30th January 2006;
(12)
Do valuation of exports declared on SOFTEX form by STP/EHTP units ;
(13)
Issue eligibility certificates for grant of employment visa to low level foreign technicians to be
engaged by STP/EHTP units as per Ministry of Home Affairs letter No.25022 / 7 / 99- F.1 dated
20.9.1999;
(14)
Allot Importer-Exporter Code number for STP/EHTP units, if same has already not been allotted
to entity;
(15)
Issue of Green Card automatically after execution of LUT;
(16)
Grant / renewal of Status Certificate in respect of STP/EHTP Units provided it does not involve
clubbing of FOB value of exports of its parent company in DTA;
(17)
Guide the entrepreneurs for setting up of STP/EHTP Units ;
(18)
Ensure and take suitable steps for effective promotion of exports from their jurisdiction;
(19)
Ensure proper co-ordination with the Central Government or State Government Departments
concerned or agencies with respect to, or for the purposes of smooth implementation STP/EHTP
Scheme and promotion of IT/ITES and ESDM sector;
(20)
Monitor the performance of the Infrastructure Service Provider (ISP) and STP/EHTP units;
5.0 (21)
Discharge such functions and exercise such powers as may be delegated to him/her by a general
or special order by the Central Government or the State Government concerned, as the case may
be;
(22)
To call for such information from an Infrastructure Service Provider (ISP) and STP/EHTP unit or
other government agency related to the affairs of STP/EHTP units/ISP as may be necessary to
monitor the performance of the Infrastructure Service Provider or the Unit, as the case may be;
(23)
The Jurisdictional Director, STPI may, delegate any or all of his powers or functions to any of the
officers employed under him;
(24)
Publicity of STP/ EHTP Scheme under their jurisdiction.
The above provisions of the STP/EHTP Scheme will be incorporated in FTP and relevant
notification of concerned departments will be issued to remove operating inconvenience
of the field formations.
159
Appendix VIII
Public Notice with respect to Work from Home
To be published in the Gazette of India Extraordinary Part-I, Section-I
Government of India
Ministry of Commerce and Industry
Department of Commerce
Directorate General of Foreign Trade
Public Notice No. 5 (RE-2013)/2009-2014
New Delhi, Dated the 18th April, 2013
Subject: Enabling employees to work from a place outside the EOU/EHTP/STP/BTP.
In exercise of powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2009-14, as amended from time
to time, Director General of Foreign Trade hereby makes following amendments by inserting a new Para i.e. Para
6.7.5 in the Handbook of Procedures Vol. I, after the existing Para 6.7.4 as below:
“6.7.5 Person(s)/employee(s) authorized by a unit of (i) IT related EOU or (ii) STP or (iii) EHTP or (iv) BTP
may work from a place outside the said unit, subject to the following conditions:
(a) There must be an Authorisation from the unit specifying the duration of such authorization.
(b) Responsibility for carrying out the work and supervision, if any, be that of the unit, which will
be liable for any misuse.
(c) Export of the resultant products/ services would take place only from the premises of the
unit.”
2.
160
Effect of this Public Notice: Authorized person(s)/employee(s) of the IT related EOU; STP; EHTP; BTP are
being permitted to work from home and/or a place outside the unit.
(Anup K. Pujari)
Director General of Foreign Trade
E-mail: [email protected]

Report of the Sub-Group of the Inter

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