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Karan Singh
| Updated: 14 Mar, 2022 | Category: Latest News

Software Technology Park Scheme – An Overview

Software Technology Park Scheme

The Software Technology Park Scheme is a 100% Export Oriented Scheme for the development & export of professional services using communication links/physical media. The Software Technology Park Scheme is distinctive in its nature as it focuses on one sector or product, i.e., Computer Software. The scheme integrates the Government idea of EPZ (Export Processing Zone) and EOU (Export Oriented Units) & the concept of Technology Parks or Science Parks, as operating elsewhere in the world.

For the promotion or advancement of software exports from the country, The STPI or Software Technology Parks of India (STPI) was set up by the Ministry of Communication & Information Technology, Government of India, as an independent statutory body to promote and increase software exports from India. Data communications services, training, statutory services, incubation facilities, and value-added services are provided by the Software Technology Park of India. The STPI Headquarters is located in New Delhi, and STPIs have been established across the country and have a presence in 53 locations. Over 4000 units are incorporated under Software Technology Park Scheme.

Software Technology Park Scheme allows software companies to establish operations with a special focus on SMEs and start-up units to foster the growth & development of the software industry since it’s a 100% Export Oriented Scheme. Units undertaking to export their overall production of products & services may be established under the EHTP (Electronic Hardware Technology Park) Scheme. Such units may be involved in manufacture & services. The unique feature of the Software Technology Park Scheme is the provisioning of single-point contact services for member units, enabling them to conduct operations at a pace appropriate with international practices.

Objectives of Software Technology Parks in India

Following are the objectives of the SPTI or Software Technology Parks in India:

  • Promotion & Export: The STPI was set up with the primary objective of promoting the development of software products within the country. Apart from this, export incentives for R&D and technology are one of the primary aims of STPI Registration.
  • Improve the Amount of Data Communication Services: Increasing the number of communication services can be facilitated to different industries via this society.
  • Contributing to MSMEs: India immensely includes Micro, Small, and Medium Enterprises to promote software development in these sectors; the Government of India has come out with different schemes under the system of STPI in India.
  • Increase the software quality and improve the requirement of customers: Through such programs provided by society, improvement or advancement in terms of quality can be achieved. This will directly affect customers’ satisfaction needs in society.

What are the Benefits of the Software Technology Park Scheme?

Following are some benefits under Software Technology Park Scheme:

  • Exemption on Custom Duty in full on imports;
  • Exemption on CED (Central Excise Duty) in full-on original procurement;
  • CSTR (Central Sales Tax Reimbursement) on indigenous purchase;
  • Importation of equipment on a loan basis or lease;
  • Permission of sales in the DTA (Domestic Tariff Area) up to 50% of the FOB value of exports;
  • Free importation of all pertinent products or equipment comprising second-hand equipment (except prohibited items);
  • Permission of 100% FDI[1];
  • Permission to use of computer imported for training (subject to certain conditions);
  • A company can establish an STP unit anywhere in India;
  • Re-export of Capital Goods is also permitted;
  • 100% Depreciation on Capital goods over 5 years of period.
  • Capital invested by foreign entrepreneurs, know-how- Royalty, Fees, Dividend, etc., can be freely repatriated after payment of Income Taxes due on them.

Role of STPI

Software Technology Park units exported software and IT worth Rs. 215264 crores in Financial Year 2010-11. The state with the biggest export contribution was Karnataka, followed by Tamil Nadu, Telangana, Maharashtra, and Haryana.

Besides regulating the Software Technology Park Scheme, STPI centres provide a variety of services comprising high-speed data communication, consultancy, data centres, data hosting, and network marketing. STPI facilitate physical hosting for the National Internet Exchange of India.

The tax benefits under the IT Act Section 10A applicable to Software Technology Park units has expired since March 2011. While the Government of India has chosen not to extend the Section 10A benefits against the request by the IT units, most of the STP (Software Technology Park) registered SME units will be affected & now will have to pay IT on profits earned from exports.

A new incentive scheme for ITES & IT companies is under discussion. It will help the dispersal of the IT industry in smaller cities and also support STPI-registered units, which are not covered under any incentive scheme.

Eligibility of STPI Registration under Software Technology Park Scheme

Following are the eligible applicant who can file for STPI Registration under Software Technology Park Scheme:

  1. An Indian Company;
  2. A branch office of the foreign company;
  3. A subsidiary of a foreign company.

Electropreneur Park

ESDM or Electronic System Design & Manufacturing is deemed to be one of the fastest-growing sectors of the Indian Economy. To support the new entrepreneurs of this sector, Software Technology Park of India, along with the IESA (Indian Electronics & Semiconductor Association) and Delhi University, has set up an Electropreneur Park in Delhi. This initiative supports 50 start-ups in the ESDM space and aims to create at least 5 global companies within 5 years. The park aims at local IP creation and indigenous product development that outcomes in increased domestic value addition.

Conclusion

STPI has been implementing the Software Technology Park Scheme and EHTP Scheme for the promotion of the IT or ITES industry. Software Technology Park Scheme is a unique scheme that is designed to promote the software industry growth of SMEs & Start-ups without any locational restrictions.

Read our Article:Market Intervention Price Scheme (MIPS) for Farmers: An Overview

Karan Singh

A legal writing enthusiast, a wanderer, and a zealous reader. After gaining a lot of knowledge about the diverse legal topics and developing research skills, Karan joined the league of legal content writers to deliver quality-rich blogs.

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